Correlation Between Adyen NV and Columbia Global

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Can any of the company-specific risk be diversified away by investing in both Adyen NV and Columbia Global 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 Adyen NV and Columbia Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adyen NV and Columbia Global Technology, you can compare the effects of market volatilities on Adyen NV and Columbia Global 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 Adyen NV with a short position of Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and Columbia Global.

Diversification Opportunities for Adyen NV and Columbia Global

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Adyen and Columbia is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Adyen NV 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 Adyen NV are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Adyen NV i.e., Adyen NV and Columbia Global go up and down completely randomly.

Pair Corralation between Adyen NV and Columbia Global

Assuming the 90 days horizon Adyen NV is expected to generate 2.24 times less return on investment than Columbia Global. In addition to that, Adyen NV is 2.69 times more volatile than Columbia Global Technology. It trades about 0.02 of its total potential returns per unit of risk. Columbia Global Technology is currently generating about 0.11 per unit of volatility. If you would invest  5,284  in Columbia Global Technology on October 5, 2024 and sell it today you would earn a total of  4,175  from holding Columbia Global Technology or generate 79.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Adyen NV  vs.  Columbia Global Technology

 Performance 
       Timeline  
Adyen NV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Adyen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Adyen NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Columbia Global Tech 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Adyen NV and Columbia Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adyen NV and Columbia Global

The main advantage of trading using opposite Adyen NV and Columbia Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adyen NV position performs unexpectedly, Columbia Global 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 Global will offset losses from the drop in Columbia Global's long position.
The idea behind Adyen NV and Columbia Global Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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