Correlation Between Columbia Moderate and Pimco Income

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

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

Diversification Opportunities for Columbia Moderate and Pimco Income

0.53

Correlation Coefficient

Columbia Moderate  Pimco Income

Very weak diversification

The 3 months correlation between Columbia and Pimco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Moderate Growth and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Columbia Moderate 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 Moderate Growth are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Columbia Moderate i.e., Columbia Moderate and Pimco Income go up and down completely randomly.

Pair Corralation between Columbia Moderate and Pimco Income

Assuming the 90 days horizon Columbia Moderate Growth is expected to generate 1.88 times more return on investment than Pimco Income. However, Columbia Moderate is 1.88 times more volatile than Pimco Income Fund. It trades about 0.08 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.06 per unit of risk. If you would invest  3,205  in Columbia Moderate Growth on October 10, 2024 and sell it today you would earn a total of  828.00  from holding Columbia Moderate Growth or generate 25.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Columbia Moderate Growth  vs.  Pimco Income Fund

Columbia Moderate Growth

Risk-Adjusted Performance

1 of 100

Weak

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

Pimco Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Moderate and Pimco Income

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

The idea behind Columbia Moderate Growth and Pimco Income Fund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..