Correlation Between Cornerstone Strategic and Columbia Small

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

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

Diversification Opportunities for Cornerstone Strategic and Columbia Small

0.93

Correlation Coefficient

Cornerstone Strategic  Columbia Small

Almost no diversification

The 3 months correlation between Cornerstone and Columbia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Value and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small Cap and Cornerstone Strategic 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 Cornerstone Strategic Value are associated (or correlated) with Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Columbia Small go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Columbia Small

Considering the 90-day investment horizon Cornerstone Strategic Value is expected to generate 0.6 times more return on investment than Columbia Small. However, Cornerstone Strategic Value is 1.67 times less risky than Columbia Small. It trades about 0.75 of its potential returns per unit of risk. Columbia Small Cap is currently generating about 0.33 per unit of risk. If you would invest  799.00  in Cornerstone Strategic Value on September 4, 2024 and sell it today you would earn a total of  118.00  from holding Cornerstone Strategic Value or generate 14.77% return on investment over 90 days.

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

Cornerstone Strategic Value  vs.  Columbia Small Cap

Cornerstone Strategic

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 39 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cornerstone Strategic and Columbia Small

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

The idea behind Cornerstone Strategic Value and Columbia Small Cap 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.