Correlation Between Columbia Small and Copeland Smid

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

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

Diversification Opportunities for Columbia Small and Copeland Smid

0.76

Correlation Coefficient

Columbia Small  Copeland Smid

Poor diversification

The 3 months correlation between Columbia and Copeland is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Copeland Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copeland Smid Cap and Columbia Small 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 Small Cap are associated (or correlated) with Copeland Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copeland Smid Cap has no effect on the direction of Columbia Small i.e., Columbia Small and Copeland Smid go up and down completely randomly.

Pair Corralation between Columbia Small and Copeland Smid

Assuming the 90 days horizon Columbia Small Cap is expected to under-perform the Copeland Smid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Small Cap is 1.33 times less risky than Copeland Smid. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Copeland Smid Cap is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,623  in Copeland Smid Cap on October 20, 2024 and sell it today you would lose (63.00) from holding Copeland Smid Cap or give up 3.88% of portfolio value over 90 days.

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

Columbia Small Cap  vs.  Copeland Smid Cap

Columbia Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Copeland Smid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copeland Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Copeland Smid 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 Small and Copeland Smid

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

The idea behind Columbia Small Cap and Copeland Smid Cap 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.