Correlation Between Columbia Convertible and Income Fund

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

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

Diversification Opportunities for Columbia Convertible and Income Fund

0.34

Correlation Coefficient

Columbia Convertible  Income Fund

Weak diversification

The 3 months correlation between Columbia and Income is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Convertible Securitie and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and Columbia Convertible 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 Convertible Securities are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Income Fund go up and down completely randomly.

Pair Corralation between Columbia Convertible and Income Fund

Assuming the 90 days horizon Columbia Convertible Securities is expected to under-perform the Income Fund. In addition to that, Columbia Convertible is 1.05 times more volatile than Income Fund Of. It trades about -0.18 of its total potential returns per unit of risk. Income Fund Of is currently generating about -0.12 per unit of volatility. If you would invest  2,582  in Income Fund Of on October 10, 2024 and sell it today you would lose (137.00) from holding Income Fund Of or give up 5.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	34.43%
Values	Daily Returns

Columbia Convertible Securitie  vs.  Income Fund Of

Columbia Convertible

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Income Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Income Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Income Fund 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 Convertible and Income Fund

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

The idea behind Columbia Convertible Securities and Income Fund Of 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..