Correlation Between Columbia Ultra and Multi Manager

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

By analyzing existing cross correlation between Columbia Ultra Short and Multi Manager Growth Strategies, you can compare the effects of market volatilities on Columbia Ultra and Multi Manager 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 Ultra with a short position of Multi Manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Ultra and Multi Manager.

Diversification Opportunities for Columbia Ultra and Multi Manager

0.61

Correlation Coefficient

Columbia Ultra  Multi Manager

Poor diversification

The 3 months correlation between Columbia and Multi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Ultra Short and Multi Manager Growth Strategie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Manager Growth and Columbia Ultra 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 Ultra Short are associated (or correlated) with Multi Manager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Manager Growth has no effect on the direction of Columbia Ultra i.e., Columbia Ultra and Multi Manager go up and down completely randomly.

Pair Corralation between Columbia Ultra and Multi Manager

Assuming the 90 days horizon Columbia Ultra is expected to generate 4.07 times less return on investment than Multi Manager. But when comparing it to its historical volatility, Columbia Ultra Short is 12.51 times less risky than Multi Manager. It trades about 0.25 of its potential returns per unit of risk. Multi Manager Growth Strategies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,359  in Multi Manager Growth Strategies on October 12, 2024 and sell it today you would earn a total of  715.00  from holding Multi Manager Growth Strategies or generate 52.61% return on investment over 90 days.

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

Columbia Ultra Short  vs.  Multi Manager Growth Strategie

Columbia Ultra Short

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Ultra Short are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Columbia Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Manager Growth

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Multi Manager Growth Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Multi Manager 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 Ultra and Multi Manager

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

The idea behind Columbia Ultra Short and Multi Manager Growth Strategies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.