Correlation Between Columbia Minnesota and Columbia

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

By analyzing existing cross correlation between Columbia Minnesota Tax Exempt and Columbia Government Mortgage, you can compare the effects of market volatilities on Columbia Minnesota 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 Columbia Minnesota with a short position of Columbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Minnesota and Columbia.

Diversification Opportunities for Columbia Minnesota and Columbia

0.51

Correlation Coefficient

Columbia Minnesota  Columbia

Very weak diversification

The 3 months correlation between Columbia and Columbia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Minnesota Tax Exempt and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government and Columbia Minnesota 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 Minnesota Tax Exempt 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 Government has no effect on the direction of Columbia Minnesota i.e., Columbia Minnesota and Columbia go up and down completely randomly.

Pair Corralation between Columbia Minnesota and Columbia

Assuming the 90 days horizon Columbia Minnesota Tax Exempt is expected to under-perform the Columbia. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Minnesota Tax Exempt is 1.52 times less risky than Columbia. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Columbia Government Mortgage is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,743  in Columbia Government Mortgage on December 30, 2024 and sell it today you would earn a total of  56.00  from holding Columbia Government Mortgage or generate 3.21% return on investment over 90 days.

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

Columbia Minnesota Tax Exempt  vs.  Columbia Government Mortgage

Columbia Minnesota Tax

Risk-Adjusted Performance

Very Weak

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

Columbia Government

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Government Mortgage are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Columbia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Minnesota and Columbia

The main advantage of trading using opposite Columbia Minnesota and Columbia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Minnesota 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 Columbia Minnesota Tax Exempt and Columbia Government Mortgage 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.