Correlation Between Columbia Flexible and Fabxx

Can any of the company-specific risk be diversified away by investing in both Columbia Flexible and Fabxx 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 Flexible and Fabxx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Flexible Capital and Fabxx, you can compare the effects of market volatilities on Columbia Flexible and Fabxx 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 Flexible with a short position of Fabxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Flexible and Fabxx.

Diversification Opportunities for Columbia Flexible and Fabxx

-0.33

Correlation Coefficient

Columbia Flexible  Fabxx

Very good diversification

The 3 months correlation between Columbia and Fabxx is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Flexible Capital and Fabxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabxx and Columbia Flexible 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 Flexible Capital are associated (or correlated) with Fabxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabxx has no effect on the direction of Columbia Flexible i.e., Columbia Flexible and Fabxx go up and down completely randomly.

Pair Corralation between Columbia Flexible and Fabxx

Assuming the 90 days horizon Columbia Flexible Capital is expected to generate 0.03 times more return on investment than Fabxx. However, Columbia Flexible Capital is 32.12 times less risky than Fabxx. It trades about 0.33 of its potential returns per unit of risk. Fabxx is currently generating about -0.23 per unit of risk. If you would invest  1,404  in Columbia Flexible Capital on September 5, 2024 and sell it today you would earn a total of  42.00  from holding Columbia Flexible Capital or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Columbia Flexible Capital  vs.  Fabxx

Columbia Flexible Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Flexible Capital are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fabxx

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Fabxx has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Columbia Flexible and Fabxx

The main advantage of trading using opposite Columbia Flexible and Fabxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Flexible position performs unexpectedly, Fabxx 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 Fabxx will offset losses from the drop in Fabxx's long position.

The idea behind Columbia Flexible Capital and Fabxx 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.