Correlation Between Columbia Multi and Invesco National
Can any of the company-specific risk be diversified away by investing in both Columbia Multi and Invesco National 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 Invesco National 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 Invesco National AMT Free, you can compare the effects of market volatilities on Columbia Multi and Invesco National 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 Invesco National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Multi and Invesco National.
Diversification Opportunities for Columbia Multi and Invesco National
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Invesco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Multi Sector Municipa and Invesco National AMT Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco National AMT 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 Invesco National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco National AMT has no effect on the direction of Columbia Multi i.e., Columbia Multi and Invesco National go up and down completely randomly.
Pair Corralation between Columbia Multi and Invesco National
Given the investment horizon of 90 days Columbia Multi Sector Municipal is expected to generate 0.85 times more return on investment than Invesco National. However, Columbia Multi Sector Municipal is 1.17 times less risky than Invesco National. It trades about 0.16 of its potential returns per unit of risk. Invesco National AMT Free is currently generating about 0.08 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. Invesco National AMT Free
Performance |
| Timeline |
| Columbia Multi Sector |
| Invesco National AMT |
Columbia Multi and Invesco National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Multi and Invesco National
The main advantage of trading using opposite Columbia Multi and Invesco National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Multi position performs unexpectedly, Invesco National 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 Invesco National will offset losses from the drop in Invesco National's 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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