Correlation Between Nebraska Municipal and Columbia Large
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and Columbia Large 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 Nebraska Municipal and Columbia Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebraska Municipal Fund and Columbia Large Cap, you can compare the effects of market volatilities on Nebraska Municipal and Columbia Large 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 Nebraska Municipal with a short position of Columbia Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Columbia Large.
Diversification Opportunities for Nebraska Municipal and Columbia Large
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nebraska and Columbia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Columbia Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Large Cap and Nebraska Municipal 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 Nebraska Municipal Fund are associated (or correlated) with Columbia Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Large Cap has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and Columbia Large go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Columbia Large
Assuming the 90 days horizon Nebraska Municipal is expected to generate 45.43 times less return on investment than Columbia Large. But when comparing it to its historical volatility, Nebraska Municipal Fund is 4.57 times less risky than Columbia Large. It trades about 0.01 of its potential returns per unit of risk. Columbia Large Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,672 in Columbia Large Cap on November 27, 2024 and sell it today you would earn a total of 2,449 from holding Columbia Large Cap or generate 52.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. Columbia Large Cap
Performance |
| Timeline |
| Nebraska Municipal |
| Columbia Large Cap |
Nebraska Municipal and Columbia Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Columbia Large
The main advantage of trading using opposite Nebraska Municipal and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, Columbia Large 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 Columbia Large will offset losses from the drop in Columbia Large's long position.| Nebraska Municipal vs. Aqr Managed Futures | Nebraska Municipal vs. The Hartford Inflation | Nebraska Municipal vs. Ab Bond Inflation | Nebraska Municipal vs. The Hartford Inflation |
| Columbia Large vs. Columbia Large Cap | Columbia Large vs. Columbia Ultra Short | Columbia Large vs. Columbia Integrated Large | Columbia Large vs. Columbia Integrated Large |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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