Correlation Between Columbia Diversified and ETF Series

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

By analyzing existing cross correlation between Columbia Diversified Fixed and ETF Series Solutions, you can compare the effects of market volatilities on Columbia Diversified and ETF Series 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 Diversified with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Diversified and ETF Series.

Diversification Opportunities for Columbia Diversified and ETF Series

0.39

Correlation Coefficient

Columbia Diversified  ETF Series

Weak diversification

The 3 months correlation between Columbia and ETF is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Diversified Fixed and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and Columbia Diversified 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 Diversified Fixed are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Columbia Diversified i.e., Columbia Diversified and ETF Series go up and down completely randomly.

Pair Corralation between Columbia Diversified and ETF Series

Given the investment horizon of 90 days Columbia Diversified is expected to generate 1.05 times less return on investment than ETF Series. In addition to that, Columbia Diversified is 2.46 times more volatile than ETF Series Solutions. It trades about 0.07 of its total potential returns per unit of risk. ETF Series Solutions is currently generating about 0.19 per unit of volatility. If you would invest  2,372  in ETF Series Solutions on December 5, 2024 and sell it today you would earn a total of  147.00  from holding ETF Series Solutions or generate 6.2% return on investment over 90 days.

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

Columbia Diversified Fixed  vs.  ETF Series Solutions

Columbia Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Diversified Fixed are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Columbia Diversified is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

ETF Series Solutions

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, ETF Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Columbia Diversified and ETF Series

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

The idea behind Columbia Diversified Fixed and ETF Series Solutions 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..