Correlation Between IShares Core and Columbia Short

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

By analyzing existing cross correlation between iShares Core 1 5 and Columbia Short Duration, you can compare the effects of market volatilities on IShares Core and Columbia Short 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 IShares Core with a short position of Columbia Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Columbia Short.

Diversification Opportunities for IShares Core and Columbia Short

0.98

Correlation Coefficient

IShares Core  Columbia Short

Almost no diversification

The 3 months correlation between IShares and Columbia is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core 1 5 and Columbia Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Short Duration and IShares Core 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 iShares Core 1 5 are associated (or correlated) with Columbia Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Short Duration has no effect on the direction of IShares Core i.e., IShares Core and Columbia Short go up and down completely randomly.

Pair Corralation between IShares Core and Columbia Short

Given the investment horizon of 90 days iShares Core 1 5 is expected to generate 0.76 times more return on investment than Columbia Short. However, iShares Core 1 5 is 1.32 times less risky than Columbia Short. It trades about 0.25 of its potential returns per unit of risk. Columbia Short Duration is currently generating about 0.17 per unit of risk. If you would invest  4,744  in iShares Core 1 5 on December 29, 2024 and sell it today you would earn a total of  88.00  from holding iShares Core 1 5 or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

iShares Core 1 5  vs.  Columbia Short Duration

iShares Core 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core 1 5 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Short Duration are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Columbia Short is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and Columbia Short

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

The idea behind iShares Core 1 5 and Columbia Short Duration 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..