Correlation Between Columbia Porate and Union Street
Can any of the company-specific risk be diversified away by investing in both Columbia Porate and Union Street 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 Porate and Union Street 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 Union Street Partners, you can compare the effects of market volatilities on Columbia Porate and Union Street 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 Porate with a short position of Union Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Porate and Union Street.
Diversification Opportunities for Columbia Porate and Union Street
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and Union is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Porate Income and Union Street Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Street Partners and Columbia Porate 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 Union Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Street Partners has no effect on the direction of Columbia Porate i.e., Columbia Porate and Union Street go up and down completely randomly.
Pair Corralation between Columbia Porate and Union Street
Assuming the 90 days horizon Columbia Porate Income is expected to under-perform the Union Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Porate Income is 2.18 times less risky than Union Street. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Union Street Partners is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,028 in Union Street Partners on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Union Street Partners or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Porate Income vs. Union Street Partners
Performance |
| Timeline |
| Columbia Porate Income |
| Union Street Partners |
Columbia Porate and Union Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Porate and Union Street
The main advantage of trading using opposite Columbia Porate and Union Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Porate position performs unexpectedly, Union Street 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 Union Street will offset losses from the drop in Union Street's long position.The idea behind Columbia Porate Income and Union Street Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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