Correlation Between Columbia Emerging and SPDR SP

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

By analyzing existing cross correlation between Columbia Emerging Markets and SPDR SP World, you can compare the effects of market volatilities on Columbia Emerging and SPDR SP 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 Emerging with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Emerging and SPDR SP.

Diversification Opportunities for Columbia Emerging and SPDR SP

0.9

Correlation Coefficient

Columbia Emerging  SPDR SP

Almost no diversification

The 3 months correlation between Columbia and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Emerging Markets and SPDR SP World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP World and Columbia Emerging 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 Emerging Markets are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP World has no effect on the direction of Columbia Emerging i.e., Columbia Emerging and SPDR SP go up and down completely randomly.

Pair Corralation between Columbia Emerging and SPDR SP

Given the investment horizon of 90 days Columbia Emerging is expected to generate 1.72 times less return on investment than SPDR SP. In addition to that, Columbia Emerging is 1.16 times more volatile than SPDR SP World. It trades about 0.03 of its total potential returns per unit of risk. SPDR SP World is currently generating about 0.05 per unit of volatility. If you would invest  2,839  in SPDR SP World on October 5, 2024 and sell it today you would earn a total of  566.00  from holding SPDR SP World or generate 19.94% return on investment over 90 days.

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

Columbia Emerging Markets  vs.  SPDR SP World

Columbia Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

SPDR SP World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Columbia Emerging and SPDR SP

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

The idea behind Columbia Emerging Markets and SPDR SP World 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.