Correlation Between American Funds and Columbia Integrated
Can any of the company-specific risk be diversified away by investing in both American Funds and Columbia Integrated 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 American Funds and Columbia Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Columbia Integrated Large, you can compare the effects of market volatilities on American Funds and Columbia Integrated 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 American Funds with a short position of Columbia Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Columbia Integrated.
Diversification Opportunities for American Funds and Columbia Integrated
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Columbia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Columbia Integrated Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Large and American Funds 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 American Funds American are associated (or correlated) with Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Large has no effect on the direction of American Funds i.e., American Funds and Columbia Integrated go up and down completely randomly.
Pair Corralation between American Funds and Columbia Integrated
Assuming the 90 days horizon American Funds is expected to generate 1.12 times less return on investment than Columbia Integrated. But when comparing it to its historical volatility, American Funds American is 1.22 times less risky than Columbia Integrated. It trades about 0.18 of its potential returns per unit of risk. Columbia Integrated Large is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,187 in Columbia Integrated Large on September 1, 2024 and sell it today you would earn a total of 404.00 from holding Columbia Integrated Large or generate 34.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
American Funds American vs. Columbia Integrated Large
Performance |
| Timeline |
| American Funds American |
| Columbia Integrated Large |
American Funds and Columbia Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Columbia Integrated
The main advantage of trading using opposite American Funds and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Columbia Integrated 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 Columbia Integrated will offset losses from the drop in Columbia Integrated's long position.| American Funds vs. Gmo High Yield | American Funds vs. Blackrock High Yield | American Funds vs. Virtus High Yield | American Funds vs. Pioneer High Yield |
| Columbia Integrated vs. Columbia Ultra Short | Columbia Integrated vs. Columbia Integrated Large | Columbia Integrated vs. Columbia Integrated Large | Columbia Integrated vs. Columbia Integrated Large |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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