Correlation Between Columbia Small and Amg Frontier

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

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

Diversification Opportunities for Columbia Small and Amg Frontier

0.53

Correlation Coefficient

Columbia Small  Amg Frontier

Very weak diversification

The 3 months correlation between Columbia and Amg is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Amg Frontier Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Frontier Small and Columbia Small 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 Small Cap are associated (or correlated) with Amg Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Frontier Small has no effect on the direction of Columbia Small i.e., Columbia Small and Amg Frontier go up and down completely randomly.

Pair Corralation between Columbia Small and Amg Frontier

Assuming the 90 days horizon Columbia Small Cap is expected to generate 0.84 times more return on investment than Amg Frontier. However, Columbia Small Cap is 1.18 times less risky than Amg Frontier. It trades about 0.09 of its potential returns per unit of risk. Amg Frontier Small is currently generating about 0.03 per unit of risk. If you would invest  2,011  in Columbia Small Cap on October 9, 2024 and sell it today you would earn a total of  633.00  from holding Columbia Small Cap or generate 31.48% return on investment over 90 days.

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

Columbia Small Cap  vs.  Amg Frontier Small

Columbia Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amg Frontier Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Columbia Small and Amg Frontier

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

The idea behind Columbia Small Cap and Amg Frontier Small 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.