Correlation Between Global X and Columbia

Can any of the company-specific risk be diversified away by investing in both Global X and Columbia 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 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 EM Core, you can compare the effects of market volatilities on Global X and Columbia 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Columbia.

Diversification Opportunities for Global X and Columbia

0.72

Correlation Coefficient

Global X  Columbia

Poor diversification

The 3 months correlation between Global and Columbia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Columbia EM Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia EM Core 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia EM Core has no effect on the direction of Global X i.e., Global X and Columbia go up and down completely randomly.

Pair Corralation between Global X and Columbia

Considering the 90-day investment horizon Global X Funds is expected to generate 1.07 times more return on investment than Columbia. However, Global X is 1.07 times more volatile than Columbia EM Core. It trades about 0.02 of its potential returns per unit of risk. Columbia EM Core is currently generating about -0.04 per unit of risk. If you would invest  2,623  in Global X Funds on September 4, 2024 and sell it today you would earn a total of  26.00  from holding Global X Funds or generate 0.99% 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 EM Core

Global X Funds

Risk-Adjusted Performance

1 of 100

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 EM Core

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia EM Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Columbia is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and Columbia

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

The idea behind Global X Funds and Columbia EM Core 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.