Correlation Between Balanced Fund and Columbia Global

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

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

Diversification Opportunities for Balanced Fund and Columbia Global

0.85

Correlation Coefficient

Balanced Fund  Columbia Global

Very poor diversification

The 3 months correlation between Balanced and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Adviser 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 Balanced Fund 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 Balanced Fund Adviser 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 Balanced Fund i.e., Balanced Fund and Columbia Global go up and down completely randomly.

Pair Corralation between Balanced Fund and Columbia Global

Assuming the 90 days horizon Balanced Fund Adviser is expected to generate 0.37 times more return on investment than Columbia Global. However, Balanced Fund Adviser is 2.73 times less risky than Columbia Global. It trades about -0.03 of its potential returns per unit of risk. Columbia Global Technology is currently generating about -0.12 per unit of risk. If you would invest  1,267  in Balanced Fund Adviser on December 30, 2024 and sell it today you would lose (17.00) from holding Balanced Fund Adviser or give up 1.34% of portfolio value over 90 days.

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

Balanced Fund Adviser  vs.  Columbia Global Technology

Balanced Fund Adviser

Risk-Adjusted Performance

Very Weak

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

Columbia Global Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Global Technology 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Balanced Fund and Columbia Global

The main advantage of trading using opposite Balanced Fund and Columbia Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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 Balanced Fund Adviser 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 Stocks Directory module to find actively traded stocks across global markets.