Correlation Between Columbia Small and Lifex Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Columbia Small and Lifex Inflation-protec at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Columbia Small and Lifex Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Small Cap and Lifex Inflation Protected Income, you can compare the effects of market volatilities on Columbia Small and Lifex Inflation-protec and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Columbia Small with a short position of Lifex Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and Lifex Inflation-protec.
Diversification Opportunities for Columbia Small and Lifex Inflation-protec
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and Lifex is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation-protec and Columbia Small is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Columbia Small Cap are associated (or correlated) with Lifex Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation-protec has no effect on the direction of Columbia Small i.e., Columbia Small and Lifex Inflation-protec go up and down completely randomly.
Pair Corralation between Columbia Small and Lifex Inflation-protec
Assuming the 90 days horizon Columbia Small Cap is expected to generate 3.39 times more return on investment than Lifex Inflation-protec. However, Columbia Small is 3.39 times more volatile than Lifex Inflation Protected Income. It trades about 0.06 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.12 per unit of risk. If you would invest 5,325 in Columbia Small Cap on September 1, 2024 and sell it today you would earn a total of 467.00 from holding Columbia Small Cap or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Small Cap vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Columbia Small Cap |
| Lifex Inflation-protec |
Columbia Small and Lifex Inflation-protec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Small and Lifex Inflation-protec
The main advantage of trading using opposite Columbia Small and Lifex Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small position performs unexpectedly, Lifex Inflation-protec can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lifex Inflation-protec will offset losses from the drop in Lifex Inflation-protec's long position.| Columbia Small vs. Nuveen Arizona Municipal | Columbia Small vs. Blrc Sgy Mnp | Columbia Small vs. T Rowe Price | Columbia Small vs. Old Westbury Municipal |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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