Correlation Between American High-income and Columbia Large

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both American High-income 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 American High-income and Columbia Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Columbia Large Cap, you can compare the effects of market volatilities on American High-income 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 American High-income with a short position of Columbia Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Columbia Large.

Diversification Opportunities for American High-income and Columbia Large

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between American and Columbia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal 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 American High-income 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 Municipal 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 American High-income i.e., American High-income and Columbia Large go up and down completely randomly.

Pair Corralation between American High-income and Columbia Large

Assuming the 90 days horizon American High-income is expected to generate 8.33 times less return on investment than Columbia Large. But when comparing it to its historical volatility, American High Income Municipal is 4.32 times less risky than Columbia Large. It trades about 0.02 of its potential returns per unit of risk. Columbia Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7,756  in Columbia Large Cap on October 25, 2024 and sell it today you would earn a total of  193.00  from holding Columbia Large Cap or generate 2.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

American High Income Municipal  vs.  Columbia Large Cap

 Performance 
       Timeline  
American High Income 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in American High Income Municipal are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, American High-income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Columbia Large Cap 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Columbia Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American High-income and Columbia Large Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American High-income and Columbia Large

The main advantage of trading using opposite American High-income and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income 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.
The idea behind American High Income Municipal and Columbia Large Cap 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.
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.

Other Complementary Tools

Bonds Directory
Find actively traded corporate debentures issued by US companies
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites