Correlation Between Federated International and Columbia Global

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

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

Diversification Opportunities for Federated International and Columbia Global

-0.19

Correlation Coefficient

Federated International  Columbia Global

Good diversification

The 3 months correlation between Federated and Columbia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Leader and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Federated International 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 Federated International Leaders are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Federated International i.e., Federated International and Columbia Global go up and down completely randomly.

Pair Corralation between Federated International and Columbia Global

Assuming the 90 days horizon Federated International Leaders is expected to generate 0.54 times more return on investment than Columbia Global. However, Federated International Leaders is 1.86 times less risky than Columbia Global. It trades about 0.39 of its potential returns per unit of risk. Columbia Global Technology is currently generating about -0.19 per unit of risk. If you would invest  3,680  in Federated International Leaders on December 5, 2024 and sell it today you would earn a total of  257.00  from holding Federated International Leaders or generate 6.98% return on investment over 90 days.

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

Federated International Leader  vs.  Columbia Global Technology

Federated International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated International Leaders are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Global Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Federated International and Columbia Global

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

The idea behind Federated International Leaders and Columbia Global Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.