Correlation Between IShares MBS and Columbia Multi
Can any of the company-specific risk be diversified away by investing in both IShares MBS and Columbia Multi 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 IShares MBS and Columbia Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MBS ETF and Columbia Multi Sector Municipal, you can compare the effects of market volatilities on IShares MBS and Columbia Multi 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 IShares MBS with a short position of Columbia Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MBS and Columbia Multi.
Diversification Opportunities for IShares MBS and Columbia Multi
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Columbia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares MBS ETF and Columbia Multi Sector Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Multi Sector and IShares MBS 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 iShares MBS ETF are associated (or correlated) with Columbia Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Multi Sector has no effect on the direction of IShares MBS i.e., IShares MBS and Columbia Multi go up and down completely randomly.
Pair Corralation between IShares MBS and Columbia Multi
Considering the 90-day investment horizon iShares MBS ETF is expected to generate 1.26 times more return on investment than Columbia Multi. However, IShares MBS is 1.26 times more volatile than Columbia Multi Sector Municipal. It trades about 0.06 of its potential returns per unit of risk. Columbia Multi Sector Municipal is currently generating about 0.05 per unit of risk. If you would invest 8,876 in iShares MBS ETF on September 2, 2024 and sell it today you would earn a total of 517.00 from holding iShares MBS ETF or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MBS ETF vs. Columbia Multi Sector Municipa
Performance |
| Timeline |
| iShares MBS ETF |
| Columbia Multi Sector |
IShares MBS and Columbia Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MBS and Columbia Multi
The main advantage of trading using opposite IShares MBS and Columbia Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MBS position performs unexpectedly, Columbia Multi 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 Multi will offset losses from the drop in Columbia Multi's long position.| IShares MBS vs. iShares 3 7 Year | IShares MBS vs. iShares JP Morgan | IShares MBS vs. iShares Intermediate GovernmentCredit | IShares MBS vs. iShares National Muni |
| Columbia Multi vs. IQ MacKay Municipal | Columbia Multi vs. IQ MacKay Municipal | Columbia Multi vs. American Century Diversified | Columbia Multi vs. Hartford Municipal Opportunities |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |