Correlation Between Columbia Integrated and Columbia High

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

By analyzing existing cross correlation between Columbia Integrated Small and Columbia High Yield, you can compare the effects of market volatilities on Columbia Integrated and Columbia High 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 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Integrated and Columbia High.

Diversification Opportunities for Columbia Integrated and Columbia High

-0.46

Correlation Coefficient

Columbia Integrated  Columbia High

Very good diversification

The 3 months correlation between Columbia and Columbia is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Integrated Small and Columbia High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia High Yield 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 Small are associated (or correlated) with Columbia High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia High Yield has no effect on the direction of Columbia Integrated i.e., Columbia Integrated and Columbia High go up and down completely randomly.

Pair Corralation between Columbia Integrated and Columbia High

Assuming the 90 days horizon Columbia Integrated Small is expected to generate 4.24 times more return on investment than Columbia High. However, Columbia Integrated is 4.24 times more volatile than Columbia High Yield. It trades about 0.15 of its potential returns per unit of risk. Columbia High Yield is currently generating about 0.04 per unit of risk. If you would invest  1,431  in Columbia Integrated Small on September 30, 2024 and sell it today you would earn a total of  337.00  from holding Columbia Integrated Small or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.54%
Values	Daily Returns

Columbia Integrated Small  vs.  Columbia High Yield

Columbia Integrated Small

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Columbia Integrated Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak essential indicators, Columbia Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia High 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 Integrated and Columbia High

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

The idea behind Columbia Integrated Small and Columbia High Yield 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.