Correlation Between Columbia Integrated and Columbia Diversified

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

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

Diversification Opportunities for Columbia Integrated and Columbia Diversified

0.85

Correlation Coefficient

Columbia Integrated  Columbia Diversified

Very poor diversification

The 3 months correlation between Columbia and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Integrated Large and Columbia Diversified Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Diversified and Columbia Integrated 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 Integrated Large are associated (or correlated) with Columbia Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Diversified has no effect on the direction of Columbia Integrated i.e., Columbia Integrated and Columbia Diversified go up and down completely randomly.

Pair Corralation between Columbia Integrated and Columbia Diversified

Assuming the 90 days horizon Columbia Integrated Large is expected to generate 1.34 times more return on investment than Columbia Diversified. However, Columbia Integrated is 1.34 times more volatile than Columbia Diversified Equity. It trades about -0.03 of its potential returns per unit of risk. Columbia Diversified Equity is currently generating about -0.1 per unit of risk. If you would invest  2,269  in Columbia Integrated Large on October 3, 2024 and sell it today you would lose (81.00) from holding Columbia Integrated Large or give up 3.57% of portfolio value over 90 days.

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

Columbia Integrated Large  vs.  Columbia Diversified Equity

Columbia Integrated Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Integrated Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Columbia Integrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Diversified Equity 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 Columbia Integrated and Columbia Diversified

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

The idea behind Columbia Integrated Large and Columbia Diversified Equity 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.