Correlation Between American High and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both American High and Columbia Convertible 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 American High and Columbia Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income and Columbia Vertible Securities, you can compare the effects of market volatilities on American High and Columbia Convertible 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 American High with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High and Columbia Convertible.
Diversification Opportunities for American High and Columbia Convertible
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Columbia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding American High Income and Columbia Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and American High 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 American High Income are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of American High i.e., American High and Columbia Convertible go up and down completely randomly.
Pair Corralation between American High and Columbia Convertible
Assuming the 90 days horizon American High is expected to generate 5.07 times less return on investment than Columbia Convertible. But when comparing it to its historical volatility, American High Income is 3.52 times less risky than Columbia Convertible. It trades about 0.3 of its potential returns per unit of risk. Columbia Vertible Securities is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 2,214 in Columbia Vertible Securities on August 31, 2024 and sell it today you would earn a total of 117.00 from holding Columbia Vertible Securities or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income vs. Columbia Vertible Securities
Performance |
| Timeline |
| American High Income |
| Columbia Convertible |
American High and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High and Columbia Convertible
The main advantage of trading using opposite American High and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High position performs unexpectedly, Columbia Convertible 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 Convertible will offset losses from the drop in Columbia Convertible's long position.| American High vs. Gabelli Convertible And | American High vs. Columbia Vertible Securities | American High vs. Calamos Dynamic Convertible | American High vs. Lord Abbett Convertible |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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