Correlation Between Floating Rate and Columbia Floating
Can any of the company-specific risk be diversified away by investing in both Floating Rate and Columbia Floating 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 Floating Rate and Columbia Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floating Rate Fund and Columbia Floating Rate, you can compare the effects of market volatilities on Floating Rate and Columbia Floating 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 Floating Rate with a short position of Columbia Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floating Rate and Columbia Floating.
Diversification Opportunities for Floating Rate and Columbia Floating
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Floating and Columbia is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Floating Rate Fund and Columbia Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Floating Rate and Floating Rate 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 Floating Rate Fund are associated (or correlated) with Columbia Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Floating Rate has no effect on the direction of Floating Rate i.e., Floating Rate and Columbia Floating go up and down completely randomly.
Pair Corralation between Floating Rate and Columbia Floating
Assuming the 90 days horizon Floating Rate is expected to generate 1.26 times less return on investment than Columbia Floating. But when comparing it to its historical volatility, Floating Rate Fund is 1.07 times less risky than Columbia Floating. It trades about 0.23 of its potential returns per unit of risk. Columbia Floating Rate is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,297 in Columbia Floating Rate on September 2, 2024 and sell it today you would earn a total of 64.00 from holding Columbia Floating Rate or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.31% |
| Values | Daily Returns |
Floating Rate Fund vs. Columbia Floating Rate
Performance |
| Timeline |
| Floating Rate |
| Columbia Floating Rate |
Floating Rate and Columbia Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floating Rate and Columbia Floating
The main advantage of trading using opposite Floating Rate and Columbia Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floating Rate position performs unexpectedly, Columbia Floating 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 Floating will offset losses from the drop in Columbia Floating's long position.| Floating Rate vs. Transamerica Cleartrack Retirement | Floating Rate vs. Franklin Lifesmart Retirement | Floating Rate vs. Tiaa Cref Lifestyle Moderate | Floating Rate vs. Saat Moderate Strategy |
| Columbia Floating vs. Columbia Porate Income | Columbia Floating vs. Columbia Ultra Short | Columbia Floating vs. Columbia Ultra Short | Columbia Floating vs. Columbia Treasury Index |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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