Correlation Between Columbia Corporate and American Funds
Can any of the company-specific risk be diversified away by investing in both Columbia Corporate and American Funds 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 Corporate and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Porate Income and American Funds 2045, you can compare the effects of market volatilities on Columbia Corporate and American Funds 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 Corporate with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Corporate and American Funds.
Diversification Opportunities for Columbia Corporate and American Funds
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and American is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Porate Income and American Funds 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2045 and Columbia Corporate 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 Porate Income are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2045 has no effect on the direction of Columbia Corporate i.e., Columbia Corporate and American Funds go up and down completely randomly.
Pair Corralation between Columbia Corporate and American Funds
Assuming the 90 days horizon Columbia Corporate is expected to generate 3.03 times less return on investment than American Funds. But when comparing it to its historical volatility, Columbia Porate Income is 1.64 times less risky than American Funds. It trades about 0.05 of its potential returns per unit of risk. American Funds 2045 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,171 in American Funds 2045 on August 29, 2024 and sell it today you would earn a total of 29.00 from holding American Funds 2045 or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Porate Income vs. American Funds 2045
Performance |
| Timeline |
| Columbia Porate Income |
| American Funds 2045 |
Columbia Corporate and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Corporate and American Funds
The main advantage of trading using opposite Columbia Corporate and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Corporate position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Columbia Corporate vs. T Rowe Price | Columbia Corporate vs. Growth Fund Of | Columbia Corporate vs. Small Cap Stock | Columbia Corporate vs. Eic Value Fund |
| American Funds vs. Astor Longshort Fund | American Funds vs. Transamerica Emerging Markets | American Funds vs. Angel Oak Ultrashort | American Funds vs. Sterling Capital Short |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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