Correlation Between Columbia Multi and FundX Investment
Can any of the company-specific risk be diversified away by investing in both Columbia Multi and FundX Investment 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 FundX Investment 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 FundX Investment Trust, you can compare the effects of market volatilities on Columbia Multi and FundX Investment 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 FundX Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Multi and FundX Investment.
Diversification Opportunities for Columbia Multi and FundX Investment
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and FundX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Multi Sector Municipa and FundX Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Investment Trust 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 FundX Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Investment Trust has no effect on the direction of Columbia Multi i.e., Columbia Multi and FundX Investment go up and down completely randomly.
Pair Corralation between Columbia Multi and FundX Investment
Given the investment horizon of 90 days Columbia Multi is expected to generate 1.4 times less return on investment than FundX Investment. In addition to that, Columbia Multi is 1.63 times more volatile than FundX Investment Trust. It trades about 0.08 of its total potential returns per unit of risk. FundX Investment Trust is currently generating about 0.18 per unit of volatility. If you would invest 2,512 in FundX Investment Trust on September 13, 2024 and sell it today you would earn a total of 21.00 from holding FundX Investment Trust or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Multi Sector Municipa vs. FundX Investment Trust
Performance |
| Timeline |
| Columbia Multi Sector |
| FundX Investment Trust |
Columbia Multi and FundX Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Multi and FundX Investment
The main advantage of trading using opposite Columbia Multi and FundX Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Multi position performs unexpectedly, FundX Investment 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 FundX Investment will offset losses from the drop in FundX Investment's long position.| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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