Correlation Between Columbia Global and Sterling Capital

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

Diversification Opportunities for Columbia Global and Sterling Capital

-0.55

Correlation Coefficient

Columbia Global  Sterling Capital

Excellent diversification

The 3 months correlation between Columbia and Sterling is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology 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 Global 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 Global Technology 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 Global i.e., Columbia Global and Sterling Capital go up and down completely randomly.

Pair Corralation between Columbia Global and Sterling Capital

Assuming the 90 days horizon Columbia Global Technology is expected to generate 4.43 times more return on investment than Sterling Capital. However, Columbia Global is 4.43 times more volatile than Sterling Capital Securitized. It trades about 0.06 of its potential returns per unit of risk. Sterling Capital Securitized is currently generating about -0.26 per unit of risk. If you would invest  9,118  in Columbia Global Technology on September 25, 2024 and sell it today you would earn a total of  132.00  from holding Columbia Global Technology or generate 1.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Columbia Global Technology  vs.  Sterling Capital Securitized

Columbia Global Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Global and Sterling Capital

The main advantage of trading using opposite Columbia Global and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Global 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 Global Technology 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.