Correlation Between Columbia Convertible and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and Ab Municipal 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 Ab Municipal 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 Ab Municipal Bond, you can compare the effects of market volatilities on Columbia Convertible and Ab Municipal 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 Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and Ab Municipal.
Diversification Opportunities for Columbia Convertible and Ab Municipal
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Columbia and AUNTX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond 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 Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Ab Municipal go up and down completely randomly.
Pair Corralation between Columbia Convertible and Ab Municipal
Assuming the 90 days horizon Columbia Convertible Securities is expected to generate 3.18 times more return on investment than Ab Municipal. However, Columbia Convertible is 3.18 times more volatile than Ab Municipal Bond. It trades about 0.07 of its potential returns per unit of risk. Ab Municipal Bond is currently generating about -0.02 per unit of risk. If you would invest 2,118 in Columbia Convertible Securities on October 18, 2024 and sell it today you would earn a total of 62.00 from holding Columbia Convertible Securities or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.37% |
| Values | Daily Returns |
Columbia Convertible Securitie vs. Ab Municipal Bond
Performance |
| Timeline |
| Columbia Convertible |
| Ab Municipal Bond |
Columbia Convertible and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Convertible and Ab Municipal
The main advantage of trading using opposite Columbia Convertible and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, Ab Municipal 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.The idea behind Columbia Convertible Securities and Ab Municipal Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Ab Municipal vs. Fidelity Vertible Securities | Ab Municipal vs. Putnam Vertible Securities | Ab Municipal vs. Lord Abbett Vertible | Ab Municipal vs. Columbia Convertible Securities |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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