Correlation Between Columbia Overseas and Champlain Small

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

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

Diversification Opportunities for Columbia Overseas and Champlain Small

-0.23

Correlation Coefficient

Columbia Overseas  Champlain Small

Very good diversification

The 3 months correlation between Columbia and Champlain is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Overseas Value and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small and Columbia Overseas 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 Overseas Value are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Columbia Overseas i.e., Columbia Overseas and Champlain Small go up and down completely randomly.

Pair Corralation between Columbia Overseas and Champlain Small

Assuming the 90 days horizon Columbia Overseas Value is expected to generate 0.49 times more return on investment than Champlain Small. However, Columbia Overseas Value is 2.03 times less risky than Champlain Small. It trades about 0.17 of its potential returns per unit of risk. Champlain Small is currently generating about -0.19 per unit of risk. If you would invest  1,074  in Columbia Overseas Value on December 13, 2024 and sell it today you would earn a total of  92.00  from holding Columbia Overseas Value or generate 8.57% return on investment over 90 days.

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

Columbia Overseas Value  vs.  Champlain Small

Columbia Overseas Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Overseas Value are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Overseas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Champlain Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Columbia Overseas and Champlain Small

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

The idea behind Columbia Overseas Value and Champlain Small 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.