Correlation Between Columbia Multi and Franklin Liberty
Can any of the company-specific risk be diversified away by investing in both Columbia Multi and Franklin Liberty 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 Franklin Liberty 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 Franklin Liberty Federal, you can compare the effects of market volatilities on Columbia Multi and Franklin Liberty 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 Franklin Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Multi and Franklin Liberty.
Diversification Opportunities for Columbia Multi and Franklin Liberty
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Franklin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Multi Sector Municipa and Franklin Liberty Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Liberty Federal 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 Franklin Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Liberty Federal has no effect on the direction of Columbia Multi i.e., Columbia Multi and Franklin Liberty go up and down completely randomly.
Pair Corralation between Columbia Multi and Franklin Liberty
Given the investment horizon of 90 days Columbia Multi Sector Municipal is expected to generate 1.15 times more return on investment than Franklin Liberty. However, Columbia Multi is 1.15 times more volatile than Franklin Liberty Federal. It trades about 0.16 of its potential returns per unit of risk. Franklin Liberty Federal is currently generating about 0.09 per unit of risk. If you would invest 2,033 in Columbia Multi Sector Municipal on August 27, 2024 and sell it today you would earn a total of 32.00 from holding Columbia Multi Sector Municipal or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Multi Sector Municipa vs. Franklin Liberty Federal
Performance |
| Timeline |
| Columbia Multi Sector |
| Franklin Liberty Federal |
Columbia Multi and Franklin Liberty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Multi and Franklin Liberty
The main advantage of trading using opposite Columbia Multi and Franklin Liberty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Multi position performs unexpectedly, Franklin Liberty 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 Franklin Liberty will offset losses from the drop in Franklin Liberty's long position.| Columbia Multi vs. SSGA Active Trust | Columbia Multi vs. SPDR MarketAxess Investment | Columbia Multi vs. SSGA Active Trust |
| Franklin Liberty vs. Franklin Liberty Intermediate | Franklin Liberty vs. Hartford Municipal Opportunities | Franklin Liberty vs. IQ MacKay Municipal |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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