Correlation Between Columbia Convertible and Federated Strategic
Can any of the company-specific risk be diversified away by investing in both Columbia Convertible and Federated Strategic 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 Federated Strategic 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 Federated Strategic Income, you can compare the effects of market volatilities on Columbia Convertible and Federated Strategic 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 Federated Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Convertible and Federated Strategic.
Diversification Opportunities for Columbia Convertible and Federated Strategic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Federated is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and Federated Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Strategic 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 Federated Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Strategic has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Federated Strategic go up and down completely randomly.
Pair Corralation between Columbia Convertible and Federated Strategic
Assuming the 90 days horizon Columbia Convertible Securities is expected to generate 2.35 times more return on investment than Federated Strategic. However, Columbia Convertible is 2.35 times more volatile than Federated Strategic Income. It trades about 0.15 of its potential returns per unit of risk. Federated Strategic Income is currently generating about 0.22 per unit of risk. If you would invest 2,216 in Columbia Convertible Securities on November 4, 2024 and sell it today you would earn a total of 40.00 from holding Columbia Convertible Securities or generate 1.81% 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. Federated Strategic Income
Performance |
| Timeline |
| Columbia Convertible |
| Federated Strategic |
Columbia Convertible and Federated Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Convertible and Federated Strategic
The main advantage of trading using opposite Columbia Convertible and Federated Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Convertible position performs unexpectedly, Federated Strategic 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 Federated Strategic will offset losses from the drop in Federated Strategic's long position.| Columbia Convertible vs. Ultra Short Fixed Income | Columbia Convertible vs. Transamerica Short Term Bond | Columbia Convertible vs. Old Westbury Short Term | Columbia Convertible vs. Alpine Ultra Short |
| Federated Strategic vs. Cmg Ultra Short | Federated Strategic vs. Transamerica Short Term Bond | Federated Strategic vs. Touchstone Ultra Short | Federated Strategic vs. Virtus Multi Sector Short |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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