Correlation Between Columbia Real and Value Fund

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

By analyzing existing cross correlation between Columbia Real Estate and Value Fund R6, you can compare the effects of market volatilities on Columbia Real and Value Fund 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 Real with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Real and Value Fund.

Diversification Opportunities for Columbia Real and Value Fund

0.94

Correlation Coefficient

Columbia Real  Value Fund

Almost no diversification

The 3 months correlation between Columbia and Value is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Real Estate and Value Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund R6 and Columbia Real 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 Real Estate are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund R6 has no effect on the direction of Columbia Real i.e., Columbia Real and Value Fund go up and down completely randomly.

Pair Corralation between Columbia Real and Value Fund

Assuming the 90 days horizon Columbia Real Estate is expected to generate 0.62 times more return on investment than Value Fund. However, Columbia Real Estate is 1.61 times less risky than Value Fund. It trades about -0.22 of its potential returns per unit of risk. Value Fund R6 is currently generating about -0.27 per unit of risk. If you would invest  1,043  in Columbia Real Estate on October 12, 2024 and sell it today you would lose (56.00) from holding Columbia Real Estate or give up 5.37% of portfolio value over 90 days.

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

Columbia Real Estate  vs.  Value Fund R6

Columbia Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Value Fund R6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Value Fund R6 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Columbia Real and Value Fund

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

The idea behind Columbia Real Estate and Value Fund R6 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.