Correlation Between Six Circles and Columbia Acorn

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

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

Diversification Opportunities for Six Circles and Columbia Acorn

-0.44

Correlation Coefficient

Six Circles  Columbia Acorn

Very good diversification

The 3 months correlation between Six and Columbia is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles International and Columbia Acorn European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Acorn European and Six Circles 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 Six Circles International are associated (or correlated) with Columbia Acorn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Acorn European has no effect on the direction of Six Circles i.e., Six Circles and Columbia Acorn go up and down completely randomly.

Pair Corralation between Six Circles and Columbia Acorn

Assuming the 90 days horizon Six Circles is expected to generate 3.32 times less return on investment than Columbia Acorn. But when comparing it to its historical volatility, Six Circles International is 1.28 times less risky than Columbia Acorn. It trades about 0.03 of its potential returns per unit of risk. Columbia Acorn European is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,087  in Columbia Acorn European on September 28, 2024 and sell it today you would earn a total of  256.00  from holding Columbia Acorn European or generate 12.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.22%
Values	Daily Returns

Six Circles International  vs.  Columbia Acorn European

Six Circles International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Acorn European

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Six Circles and Columbia Acorn

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

The idea behind Six Circles International and Columbia Acorn European 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.