Correlation Between Western Asset and Columbia Limited
Can any of the company-specific risk be diversified away by investing in both Western Asset and Columbia Limited 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 Western Asset and Columbia Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Columbia Limited Duration, you can compare the effects of market volatilities on Western Asset and Columbia Limited 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 Western Asset with a short position of Columbia Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Columbia Limited.
Diversification Opportunities for Western Asset and Columbia Limited
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Columbia is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Columbia Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Limited Duration and Western Asset 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 Western Asset Diversified are associated (or correlated) with Columbia Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Limited Duration has no effect on the direction of Western Asset i.e., Western Asset and Columbia Limited go up and down completely randomly.
Pair Corralation between Western Asset and Columbia Limited
Assuming the 90 days horizon Western Asset Diversified is expected to generate 1.42 times more return on investment than Columbia Limited. However, Western Asset is 1.42 times more volatile than Columbia Limited Duration. It trades about 0.18 of its potential returns per unit of risk. Columbia Limited Duration is currently generating about 0.14 per unit of risk. If you would invest 1,514 in Western Asset Diversified on October 22, 2024 and sell it today you would earn a total of 11.00 from holding Western Asset Diversified or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Columbia Limited Duration
Performance |
| Timeline |
| Western Asset Diversified |
| Columbia Limited Duration |
Western Asset and Columbia Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Columbia Limited
The main advantage of trading using opposite Western Asset and Columbia Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Columbia Limited 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 Limited will offset losses from the drop in Columbia Limited's long position.| Western Asset vs. Aqr Sustainable Long Short | Western Asset vs. Aamhimco Short Duration | Western Asset vs. Baird Short Term Bond | Western Asset vs. Jhancock Short Duration |
| Columbia Limited vs. Touchstone Small Cap | Columbia Limited vs. Sp Smallcap 600 | Columbia Limited vs. Glg Intl Small | Columbia Limited vs. Cardinal Small Cap |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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