Correlation Between Columbia Conservative and Fm Investments
Can any of the company-specific risk be diversified away by investing in both Columbia Conservative and Fm Investments 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 Conservative and Fm Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Conservative C and Fm Investments Large, you can compare the effects of market volatilities on Columbia Conservative and Fm Investments 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 Conservative with a short position of Fm Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Conservative and Fm Investments.
Diversification Opportunities for Columbia Conservative and Fm Investments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and IAFMX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Conservative C and Fm Investments Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm Investments Large and Columbia Conservative 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 Conservative C are associated (or correlated) with Fm Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm Investments Large has no effect on the direction of Columbia Conservative i.e., Columbia Conservative and Fm Investments go up and down completely randomly.
Pair Corralation between Columbia Conservative and Fm Investments
Assuming the 90 days horizon Columbia Conservative is expected to generate 3.49 times less return on investment than Fm Investments. But when comparing it to its historical volatility, Columbia Conservative C is 9.13 times less risky than Fm Investments. It trades about 0.12 of its potential returns per unit of risk. Fm Investments Large is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,139 in Fm Investments Large on September 12, 2025 and sell it today you would earn a total of 59.00 from holding Fm Investments Large or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Columbia Conservative C vs. Fm Investments Large
Performance |
| Timeline |
| Columbia Conservative |
| Fm Investments Large |
Columbia Conservative and Fm Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Conservative and Fm Investments
The main advantage of trading using opposite Columbia Conservative and Fm Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Conservative position performs unexpectedly, Fm Investments 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 Fm Investments will offset losses from the drop in Fm Investments' long position.The idea behind Columbia Conservative C and Fm Investments Large 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.
| Fm Investments vs. Fm Investments Large | Fm Investments vs. Hennessy Large Cap | Fm Investments vs. Frontier Mfg E | Fm Investments vs. Frontier Mfg E |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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