Correlation Between Columbia Moderate and Sterling Capital

Can any of the company-specific risk be diversified away by investing in both Columbia Moderate and Sterling Capital 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 Sterling Capital 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 Sterling Capital Securitized, you can compare the effects of market volatilities on Columbia Moderate and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Moderate and Sterling Capital.

Diversification Opportunities for Columbia Moderate and Sterling Capital

-0.18

Correlation Coefficient

Columbia Moderate  Sterling Capital

Good diversification

The 3 months correlation between Columbia and Sterling is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Moderate Growth and Sterling Capital Securitized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Sec 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Sec has no effect on the direction of Columbia Moderate i.e., Columbia Moderate and Sterling Capital go up and down completely randomly.

Pair Corralation between Columbia Moderate and Sterling Capital

Assuming the 90 days horizon Columbia Moderate Growth is expected to generate 1.7 times more return on investment than Sterling Capital. However, Columbia Moderate is 1.7 times more volatile than Sterling Capital Securitized. It trades about 0.1 of its potential returns per unit of risk. Sterling Capital Securitized is currently generating about -0.16 per unit of risk. If you would invest  4,001  in Columbia Moderate Growth on September 17, 2024 and sell it today you would earn a total of  109.00  from holding Columbia Moderate Growth or generate 2.72% return on investment over 90 days.

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

Columbia Moderate Growth  vs.  Sterling Capital Securitized

Columbia Moderate Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Moderate Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Sterling Capital Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sterling Capital Securitized has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sterling Capital 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 Sterling Capital

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

The idea behind Columbia Moderate Growth and Sterling Capital Securitized 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.