Correlation Between Ab Global and Columbia Floating

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

By analyzing existing cross correlation between Ab Global Risk and Columbia Floating Rate, you can compare the effects of market volatilities on Ab Global and Columbia Floating 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 Ab Global with a short position of Columbia Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Columbia Floating.

Diversification Opportunities for Ab Global and Columbia Floating

-0.39

Correlation Coefficient

Ab Global  Columbia Floating

Very good diversification

The 3 months correlation between CBSYX and Columbia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Columbia Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Floating Rate and Ab Global 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 Ab Global Risk are associated (or correlated) with Columbia Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Floating Rate has no effect on the direction of Ab Global i.e., Ab Global and Columbia Floating go up and down completely randomly.

Pair Corralation between Ab Global and Columbia Floating

Assuming the 90 days horizon Ab Global Risk is expected to under-perform the Columbia Floating. In addition to that, Ab Global is 73.74 times more volatile than Columbia Floating Rate. It trades about -0.22 of its total potential returns per unit of risk. Columbia Floating Rate is currently generating about -0.13 per unit of volatility. If you would invest  3,364  in Columbia Floating Rate on September 22, 2024 and sell it today you would lose (4.00) from holding Columbia Floating Rate or give up 0.12% of portfolio value over 90 days.

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

Ab Global Risk  vs.  Columbia Floating Rate

Ab Global Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Columbia Floating Rate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Floating Rate are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ab Global and Columbia Floating

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

The idea behind Ab Global Risk and Columbia Floating Rate 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.