Correlation Between Columbia Convertible and Guggenheim High
Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and Guggenheim High 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 Guggenheim High 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 Guggenheim High Yield, you can compare the effects of market volatilities on Columbia Convertible and Guggenheim High 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 Guggenheim High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and Guggenheim High.
Diversification Opportunities for Columbia Convertible and Guggenheim High
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Guggenheim is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and Guggenheim High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim High Yield 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 Guggenheim High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim High Yield has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Guggenheim High go up and down completely randomly.
Pair Corralation between Columbia Convertible and Guggenheim High
Assuming the 90 days horizon Columbia Convertible Securities is expected to generate 3.1 times more return on investment than Guggenheim High. However, Columbia Convertible is 3.1 times more volatile than Guggenheim High Yield. It trades about 0.18 of its potential returns per unit of risk. Guggenheim High Yield is currently generating about 0.31 per unit of risk. If you would invest 2,210 in Columbia Convertible Securities on October 25, 2024 and sell it today you would earn a total of 50.00 from holding Columbia Convertible Securities or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Convertible Securitie vs. Guggenheim High Yield
Performance |
| Timeline |
| Columbia Convertible |
| Guggenheim High Yield |
Columbia Convertible and Guggenheim High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Convertible and Guggenheim High
The main advantage of trading using opposite Columbia Convertible and Guggenheim High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, Guggenheim High 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 Guggenheim High will offset losses from the drop in Guggenheim High's long position.| Columbia Convertible vs. Live Oak Health | Columbia Convertible vs. Lord Abbett Health | Columbia Convertible vs. Alger Health Sciences | Columbia Convertible vs. Baillie Gifford Health |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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