Correlation Between Columbia Multi and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Columbia Multi and Dow Jones 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 Multi and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Multi Sector Municipal and Dow Jones Industrial, you can compare the effects of market volatilities on Columbia Multi and Dow Jones 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 Multi with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Multi and Dow Jones.
Diversification Opportunities for Columbia Multi and Dow Jones
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Columbia and Dow is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Multi Sector Municipa and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Columbia Multi 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 Multi Sector Municipal are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Columbia Multi i.e., Columbia Multi and Dow Jones go up and down completely randomly.
Pair Corralation between Columbia Multi and Dow Jones
Given the investment horizon of 90 days Columbia Multi is expected to generate 3.95 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Columbia Multi Sector Municipal is 2.22 times less risky than Dow Jones. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,359,792 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 1,113,865 from holding Dow Jones Industrial or generate 33.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Multi Sector Municipa vs. Dow Jones Industrial
Performance |
| Timeline |
Columbia Multi and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Columbia Multi Sector Municipal
Pair trading matchups for Columbia Multi
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Columbia Multi and Dow Jones
The main advantage of trading using opposite Columbia Multi and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Multi position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Columbia Multi vs. SSGA Active Trust | Columbia Multi vs. SPDR MarketAxess Investment | Columbia Multi vs. SSGA Active Trust |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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