Correlation Between Global X and Columbia Emerging

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

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

Diversification Opportunities for Global X and Columbia Emerging

0.63

Correlation Coefficient

Global X  Columbia Emerging

Poor diversification

The 3 months correlation between Global and Columbia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and Global X 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 Global X Funds are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Global X i.e., Global X and Columbia Emerging go up and down completely randomly.

Pair Corralation between Global X and Columbia Emerging

Considering the 90-day investment horizon Global X is expected to generate 7.48 times less return on investment than Columbia Emerging. In addition to that, Global X is 1.19 times more volatile than Columbia Emerging Markets. It trades about 0.01 of its total potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.12 per unit of volatility. If you would invest  2,080  in Columbia Emerging Markets on December 29, 2024 and sell it today you would earn a total of  146.00  from holding Columbia Emerging Markets or generate 7.02% return on investment over 90 days.

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

Global X Funds  vs.  Columbia Emerging Markets

Global X Funds

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Columbia Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Emerging Markets are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Columbia Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Global X and Columbia Emerging

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

The idea behind Global X Funds and Columbia Emerging Markets 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.