Correlation Between Columbia Convertible and American Growth
Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and American Growth 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 Convertible and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Convertible Securities and American Growth Fund, you can compare the effects of market volatilities on Columbia Convertible and American Growth 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 Convertible with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and American Growth.
Diversification Opportunities for Columbia Convertible and American Growth
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Columbia and American is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Columbia Convertible 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 Convertible Securities are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and American Growth go up and down completely randomly.
Pair Corralation between Columbia Convertible and American Growth
Assuming the 90 days horizon Columbia Convertible Securities is expected to generate 0.54 times more return on investment than American Growth. However, Columbia Convertible Securities is 1.84 times less risky than American Growth. It trades about 0.12 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 2,118 in Columbia Convertible Securities on November 2, 2024 and sell it today you would earn a total of 124.00 from holding Columbia Convertible Securities or generate 5.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 16.19% |
| Values | Daily Returns |
Columbia Convertible Securitie vs. American Growth Fund
Performance |
| Timeline |
| Columbia Convertible |
| American Growth |
Columbia Convertible and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Convertible and American Growth
The main advantage of trading using opposite Columbia Convertible and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.| Columbia Convertible vs. Guggenheim Managed Futures | Columbia Convertible vs. Ab Bond Inflation | Columbia Convertible vs. Atac Inflation Rotation | Columbia Convertible vs. Cref Inflation Linked Bond |
| American Growth vs. Real Estate Ultrasector | American Growth vs. Nexpoint Real Estate | American Growth vs. Columbia Real Estate | American Growth vs. Prudential Real Estate |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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