Correlation Between Aig Government and Columbia
Can any of the company-specific risk be diversified away by investing in both Aig Government and Columbia 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 Aig Government and Columbia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Columbia Government Mortgage, you can compare the effects of market volatilities on Aig Government and Columbia 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 Aig Government with a short position of Columbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Columbia.
Diversification Opportunities for Aig Government and Columbia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aig and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government and Aig Government 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 Aig Government Money are associated (or correlated) with Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Government has no effect on the direction of Aig Government i.e., Aig Government and Columbia go up and down completely randomly.
Pair Corralation between Aig Government and Columbia
Assuming the 90 days horizon Aig Government is expected to generate 1.68 times less return on investment than Columbia. But when comparing it to its historical volatility, Aig Government Money is 2.86 times less risky than Columbia. It trades about 0.05 of its potential returns per unit of risk. Columbia Government Mortgage is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,648 in Columbia Government Mortgage on November 9, 2024 and sell it today you would earn a total of 123.00 from holding Columbia Government Mortgage or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Columbia Government Mortgage
Performance |
| Timeline |
| Aig Government Money |
| Columbia Government |
Aig Government and Columbia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Columbia
The main advantage of trading using opposite Aig Government and Columbia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Columbia 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 will offset losses from the drop in Columbia's long position.| Aig Government vs. Elfun Government Money | Aig Government vs. Jpmorgan Government Bond | Aig Government vs. Dws Government Money | Aig Government vs. John Hancock Government |
| Columbia vs. Gmo High Yield | Columbia vs. Litman Gregory Masters | Columbia vs. Pace High Yield | Columbia vs. Intal High Relative |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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