Correlation Between Columbia Corporate and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both Columbia Corporate 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 Columbia Corporate and Columbia Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Porate Income and Columbia Vertible Securities, you can compare the effects of market volatilities on Columbia Corporate 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 Columbia Corporate with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Corporate and Columbia Convertible.
Diversification Opportunities for Columbia Corporate and Columbia Convertible
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Columbia and Columbia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Porate 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 Columbia Corporate 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 Porate 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 Columbia Corporate i.e., Columbia Corporate and Columbia Convertible go up and down completely randomly.
Pair Corralation between Columbia Corporate and Columbia Convertible
Assuming the 90 days horizon Columbia Corporate is expected to generate 6.57 times less return on investment than Columbia Convertible. But when comparing it to its historical volatility, Columbia Porate Income is 1.33 times less risky than Columbia Convertible. It trades about 0.12 of its potential returns per unit of risk. Columbia Vertible Securities is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 2,203 in Columbia Vertible Securities on September 3, 2024 and sell it today you would earn a total of 131.00 from holding Columbia Vertible Securities or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Porate Income vs. Columbia Vertible Securities
Performance |
| Timeline |
| Columbia Porate Income |
| Columbia Convertible |
Columbia Corporate and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Corporate and Columbia Convertible
The main advantage of trading using opposite Columbia Corporate and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Corporate 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.The idea behind Columbia Porate Income and Columbia Vertible Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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