Correlation Between Columbia Emerging and Credit Suisse

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

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

Diversification Opportunities for Columbia Emerging and Credit Suisse

0.42

Correlation Coefficient

Columbia Emerging  Credit Suisse

Very weak diversification

The 3 months correlation between Columbia and Credit is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Emerging Markets and Credit Suisse Multialternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Multia and Columbia Emerging 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 Emerging Markets are associated (or correlated) with Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Multia has no effect on the direction of Columbia Emerging i.e., Columbia Emerging and Credit Suisse go up and down completely randomly.

Pair Corralation between Columbia Emerging and Credit Suisse

Assuming the 90 days horizon Columbia Emerging Markets is expected to generate 0.36 times more return on investment than Credit Suisse. However, Columbia Emerging Markets is 2.78 times less risky than Credit Suisse. It trades about -0.2 of its potential returns per unit of risk. Credit Suisse Multialternative is currently generating about -0.21 per unit of risk. If you would invest  1,397  in Columbia Emerging Markets on October 9, 2024 and sell it today you would lose (57.00) from holding Columbia Emerging Markets or give up 4.08% of portfolio value over 90 days.

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

Columbia Emerging Markets  vs.  Credit Suisse Multialternative

Columbia Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Credit Suisse Multia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Suisse Multialternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Columbia Emerging and Credit Suisse

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

The idea behind Columbia Emerging Markets and Credit Suisse Multialternative 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.