Correlation Between Columbia Multi and First Trust
Can any of the company-specific risk be diversified away by investing in both Columbia Multi and First Trust 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 First Trust 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 First Trust Exchange Traded, you can compare the effects of market volatilities on Columbia Multi and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Multi and First Trust.
Diversification Opportunities for Columbia Multi and First Trust
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Multi Sector Municipa and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Columbia Multi i.e., Columbia Multi and First Trust go up and down completely randomly.
Pair Corralation between Columbia Multi and First Trust
Given the investment horizon of 90 days Columbia Multi Sector Municipal is expected to generate 0.97 times more return on investment than First Trust. However, Columbia Multi Sector Municipal is 1.03 times less risky than First Trust. It trades about 0.06 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about -0.08 per unit of risk. If you would invest 2,046 in Columbia Multi Sector Municipal on September 12, 2024 and sell it today you would earn a total of 27.00 from holding Columbia Multi Sector Municipal or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Multi Sector Municipa vs. First Trust Exchange Traded
Performance |
| Timeline |
| Columbia Multi Sector |
| First Trust Exchange |
Columbia Multi and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Multi and First Trust
The main advantage of trading using opposite Columbia Multi and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Multi position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Columbia Multi vs. BlackRock High Yield | Columbia Multi vs. iShares iBonds Dec | Columbia Multi vs. iShares Short Maturity | Columbia Multi vs. iShares iBonds Dec |
| First Trust vs. Vanguard Intermediate Term Treasury | First Trust vs. Vanguard Long Term Treasury | First Trust vs. Vanguard Short Term Treasury | First Trust vs. Columbia Multi Sector 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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