Correlation Between Real Assets and Columbia Convertible

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

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

Diversification Opportunities for Real Assets and Columbia Convertible

0.01

Correlation Coefficient

Real Assets  Columbia Convertible

Significant diversification

The 3 months correlation between Real and Columbia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Columbia Convertible Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Real Assets i.e., Real Assets and Columbia Convertible go up and down completely randomly.

Pair Corralation between Real Assets and Columbia Convertible

Assuming the 90 days horizon Real Assets Portfolio is expected to generate 0.5 times more return on investment than Columbia Convertible. However, Real Assets Portfolio is 2.0 times less risky than Columbia Convertible. It trades about 0.39 of its potential returns per unit of risk. Columbia Convertible Securities is currently generating about -0.05 per unit of risk. If you would invest  973.00  in Real Assets Portfolio on December 20, 2024 and sell it today you would earn a total of  83.00  from holding Real Assets Portfolio or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Real Assets Portfolio  vs.  Columbia Convertible Securitie

Real Assets Portfolio

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Real Assets Portfolio are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Real Assets may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Columbia Convertible

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Real Assets and Columbia Convertible

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

The idea behind Real Assets Portfolio and Columbia Convertible Securities 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.