Correlation Between Columbia Large and Columbia Pacific/asia

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

By analyzing existing cross correlation between Columbia Large Cap and Columbia Pacificasia Fund, you can compare the effects of market volatilities on Columbia Large and Columbia Pacific/asia 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 Large with a short position of Columbia Pacific/asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Large and Columbia Pacific/asia.

Diversification Opportunities for Columbia Large and Columbia Pacific/asia

0.57

Correlation Coefficient

Columbia Large  Columbia Pacific/asia

Very weak diversification

The 3 months correlation between Columbia and Columbia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Large Cap and Columbia Pacificasia Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Pacific/asia and Columbia Large 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 Large Cap are associated (or correlated) with Columbia Pacific/asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Pacific/asia has no effect on the direction of Columbia Large i.e., Columbia Large and Columbia Pacific/asia go up and down completely randomly.

Pair Corralation between Columbia Large and Columbia Pacific/asia

Assuming the 90 days horizon Columbia Large Cap is expected to generate 0.27 times more return on investment than Columbia Pacific/asia. However, Columbia Large Cap is 3.77 times less risky than Columbia Pacific/asia. It trades about 0.04 of its potential returns per unit of risk. Columbia Pacificasia Fund is currently generating about -0.1 per unit of risk. If you would invest  1,201  in Columbia Large Cap on October 6, 2024 and sell it today you would earn a total of  12.00  from holding Columbia Large Cap or generate 1.0% return on investment over 90 days.

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

Columbia Large Cap  vs.  Columbia Pacificasia Fund

Columbia Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Pacific/asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Pacificasia Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Large and Columbia Pacific/asia

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

The idea behind Columbia Large Cap and Columbia Pacificasia Fund 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.