Correlation Between Columbia Diversified and Capital Group

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

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

Diversification Opportunities for Columbia Diversified and Capital Group

0.24

Correlation Coefficient

Columbia Diversified  Capital Group

Modest diversification

The 3 months correlation between Columbia and Capital is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Diversified Fixed and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed and Columbia Diversified 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 Diversified Fixed are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of Columbia Diversified i.e., Columbia Diversified and Capital Group go up and down completely randomly.

Pair Corralation between Columbia Diversified and Capital Group

Given the investment horizon of 90 days Columbia Diversified Fixed is expected to generate 4.08 times more return on investment than Capital Group. However, Columbia Diversified is 4.08 times more volatile than Capital Group Fixed. It trades about 0.22 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.17 per unit of risk. If you would invest  1,764  in Columbia Diversified Fixed on December 4, 2024 and sell it today you would earn a total of  26.00  from holding Columbia Diversified Fixed or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Columbia Diversified Fixed  vs.  Capital Group Fixed

Columbia Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Diversified Fixed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Columbia Diversified is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Capital Group Fixed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Fixed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Capital Group is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Columbia Diversified and Capital Group

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

The idea behind Columbia Diversified Fixed and Capital Group Fixed 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.