Correlation Between Columbia Moderate and Saat Aggressive

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

By analyzing existing cross correlation between Columbia Moderate Growth and Saat Aggressive Strategy, you can compare the effects of market volatilities on Columbia Moderate and Saat Aggressive 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 Moderate with a short position of Saat Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Moderate and Saat Aggressive.

Diversification Opportunities for Columbia Moderate and Saat Aggressive

0.92

Correlation Coefficient

Columbia Moderate  Saat Aggressive

Almost no diversification

The 3 months correlation between Columbia and Saat is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Moderate Growth and Saat Aggressive Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Aggressive Strategy and Columbia Moderate 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 Moderate Growth are associated (or correlated) with Saat Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Aggressive Strategy has no effect on the direction of Columbia Moderate i.e., Columbia Moderate and Saat Aggressive go up and down completely randomly.

Pair Corralation between Columbia Moderate and Saat Aggressive

Assuming the 90 days horizon Columbia Moderate Growth is expected to under-perform the Saat Aggressive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Moderate Growth is 1.11 times less risky than Saat Aggressive. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Saat Aggressive Strategy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,463  in Saat Aggressive Strategy on December 2, 2024 and sell it today you would lose (2.00) from holding Saat Aggressive Strategy or give up 0.14% of portfolio value over 90 days.

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

Columbia Moderate Growth  vs.  Saat Aggressive Strategy

Columbia Moderate Growth

Risk-Adjusted Performance

Very Weak

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

Saat Aggressive Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saat Aggressive Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Saat Aggressive 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 Moderate and Saat Aggressive

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

The idea behind Columbia Moderate Growth and Saat Aggressive Strategy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.