Correlation Between Timothy Fixed and Columbia Moderate

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

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

Diversification Opportunities for Timothy Fixed and Columbia Moderate

-0.23

Correlation Coefficient

Timothy Fixed  Columbia Moderate

Very good diversification

The 3 months correlation between Timothy and Columbia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Fixed Income and Columbia Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Moderate Growth and Timothy Fixed 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 Timothy Fixed Income are associated (or correlated) with Columbia Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Moderate Growth has no effect on the direction of Timothy Fixed i.e., Timothy Fixed and Columbia Moderate go up and down completely randomly.

Pair Corralation between Timothy Fixed and Columbia Moderate

Assuming the 90 days horizon Timothy Fixed Income is expected to under-perform the Columbia Moderate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Timothy Fixed Income is 1.38 times less risky than Columbia Moderate. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Columbia Moderate Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,001  in Columbia Moderate Growth on September 17, 2024 and sell it today you would earn a total of  95.00  from holding Columbia Moderate Growth or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Timothy Fixed Income  vs.  Columbia Moderate Growth

Timothy Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Moderate Growth

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Moderate Growth are ranked lower than 6 (%) 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.

Pair Trading with Timothy Fixed and Columbia Moderate

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

The idea behind Timothy Fixed Income and Columbia Moderate Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.