Correlation Between Financial Industries and Columbia Ultra
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Columbia Ultra 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 Financial Industries and Columbia Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Columbia Ultra Short, you can compare the effects of market volatilities on Financial Industries and Columbia Ultra 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 Financial Industries with a short position of Columbia Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Columbia Ultra.
Diversification Opportunities for Financial Industries and Columbia Ultra
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Financial and Columbia is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Columbia Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Ultra Short and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Columbia Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Ultra Short has no effect on the direction of Financial Industries i.e., Financial Industries and Columbia Ultra go up and down completely randomly.
Pair Corralation between Financial Industries and Columbia Ultra
Assuming the 90 days horizon Financial Industries Fund is expected to generate 14.5 times more return on investment than Columbia Ultra. However, Financial Industries is 14.5 times more volatile than Columbia Ultra Short. It trades about 0.1 of its potential returns per unit of risk. Columbia Ultra Short is currently generating about 0.2 per unit of risk. If you would invest 1,634 in Financial Industries Fund on November 3, 2024 and sell it today you would earn a total of 285.00 from holding Financial Industries Fund or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.32% |
| Values | Daily Returns |
Financial Industries Fund vs. Columbia Ultra Short
Performance |
| Timeline |
| Financial Industries |
| Columbia Ultra Short |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Financial Industries and Columbia Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Columbia Ultra
The main advantage of trading using opposite Financial Industries and Columbia Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Columbia Ultra 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 Ultra will offset losses from the drop in Columbia Ultra's long position.| Financial Industries vs. James Balanced Golden | Financial Industries vs. Oppenheimer Gold Special | Financial Industries vs. Great West Goldman Sachs | Financial Industries vs. Europac Gold Fund |
| Columbia Ultra vs. Columbia Large Cap | Columbia Ultra vs. Columbia Large Cap | Columbia Ultra vs. Columbia Large Cap | Columbia Ultra vs. Columbia International Value |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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