Correlation Between Columbia Sustainable and SPDR MSCI

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

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

Diversification Opportunities for Columbia Sustainable and SPDR MSCI

-0.5

Correlation Coefficient

Columbia Sustainable  SPDR MSCI

Very good diversification

The 3 months correlation between Columbia and SPDR is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sustainable Equity and SPDR MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Emerging and Columbia Sustainable 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 Sustainable Equity are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Emerging has no effect on the direction of Columbia Sustainable i.e., Columbia Sustainable and SPDR MSCI go up and down completely randomly.

Pair Corralation between Columbia Sustainable and SPDR MSCI

Given the investment horizon of 90 days Columbia Sustainable Equity is expected to generate 0.65 times more return on investment than SPDR MSCI. However, Columbia Sustainable Equity is 1.53 times less risky than SPDR MSCI. It trades about 0.09 of its potential returns per unit of risk. SPDR MSCI Emerging is currently generating about 0.06 per unit of risk. If you would invest  4,000  in Columbia Sustainable Equity on October 9, 2024 and sell it today you would earn a total of  347.00  from holding Columbia Sustainable Equity or generate 8.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	57.09%
Values	Daily Returns

Columbia Sustainable Equity  vs.  SPDR MSCI Emerging

Columbia Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Sustainable Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Columbia Sustainable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SPDR MSCI Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR MSCI Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Columbia Sustainable and SPDR MSCI

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

The idea behind Columbia Sustainable Equity and SPDR MSCI Emerging 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.