Correlation Between Bitcoin and Columbia Select

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

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

Diversification Opportunities for Bitcoin and Columbia Select

-0.1

Correlation Coefficient

Bitcoin  Columbia Select

Good diversification

The 3 months correlation between Bitcoin and Columbia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and Columbia Select Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Global and Bitcoin 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 Bitcoin are associated (or correlated) with Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Global has no effect on the direction of Bitcoin i.e., Bitcoin and Columbia Select go up and down completely randomly.

Pair Corralation between Bitcoin and Columbia Select

Assuming the 90 days trading horizon Bitcoin is expected to generate 3.09 times more return on investment than Columbia Select. However, Bitcoin is 3.09 times more volatile than Columbia Select Global. It trades about 0.21 of its potential returns per unit of risk. Columbia Select Global is currently generating about -0.16 per unit of risk. If you would invest  7,671,641  in Bitcoin on October 9, 2024 and sell it today you would earn a total of  2,551,359  from holding Bitcoin or generate 33.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Bitcoin  vs.  Columbia Select Global

Bitcoin

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bitcoin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Columbia Select Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bitcoin and Columbia Select

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

The idea behind Bitcoin and Columbia Select Global 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.