Correlation Between American Funds and Columbia Select
Can any of the company-specific risk be diversified away by investing in both American Funds and Columbia Select 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 Select 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 Select Large Cap, you can compare the effects of market volatilities on American Funds and Columbia Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Columbia Select.
Diversification Opportunities for American Funds and Columbia Select
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Columbia Select Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select 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 Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Large has no effect on the direction of American Funds i.e., American Funds and Columbia Select go up and down completely randomly.
Pair Corralation between American Funds and Columbia Select
Assuming the 90 days horizon American Funds American is expected to generate 0.47 times more return on investment than Columbia Select. However, American Funds American is 2.13 times less risky than Columbia Select. It trades about -0.07 of its potential returns per unit of risk. Columbia Select Large Cap is currently generating about -0.17 per unit of risk. If you would invest 5,979 in American Funds American on September 13, 2024 and sell it today you would lose (41.00) from holding American Funds American or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Columbia Select Large Cap
Performance |
| Timeline |
| American Funds American |
| Columbia Select Large |
American Funds and Columbia Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Columbia Select
The main advantage of trading using opposite American Funds and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Columbia Select 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 Select will offset losses from the drop in Columbia Select's long position.| American Funds vs. Small Pany Growth | American Funds vs. Smallcap Growth Fund | American Funds vs. Qs Defensive Growth | American Funds vs. Eip Growth And |
| Columbia Select vs. Columbia Seligman Munications | Columbia Select vs. Columbia Select Large Cap | Columbia Select vs. Columbia Balanced Fund | Columbia Select vs. Columbia Select Large Cap |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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