Correlation Between International Investors and Columbia Select

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

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

Diversification Opportunities for International Investors and Columbia Select

0.4

Correlation Coefficient

International Investors  Columbia Select

Very weak diversification

The 3 months correlation between International and Columbia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Columbia Select Smaller Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Smaller and International Investors 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 International Investors Gold are associated (or correlated) with Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Smaller has no effect on the direction of International Investors i.e., International Investors and Columbia Select go up and down completely randomly.

Pair Corralation between International Investors and Columbia Select

Assuming the 90 days horizon International Investors Gold is expected to under-perform the Columbia Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Investors Gold is 1.19 times less risky than Columbia Select. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Columbia Select Smaller Cap is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,533  in Columbia Select Smaller Cap on October 24, 2024 and sell it today you would lose (226.00) from holding Columbia Select Smaller Cap or give up 8.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

International Investors Gold  vs.  Columbia Select Smaller Cap

International Investors

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Select Smaller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Select Smaller Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 International Investors and Columbia Select

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

The idea behind International Investors Gold and Columbia Select Smaller Cap 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.