Correlation Between Columbia Total and Columbia Pacific/asia

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

By analyzing existing cross correlation between Columbia Total Return and Columbia Pacificasia Fund, you can compare the effects of market volatilities on Columbia Total and Columbia Pacific/asia 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 Total with a short position of Columbia Pacific/asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Total and Columbia Pacific/asia.

Diversification Opportunities for Columbia Total and Columbia Pacific/asia

0.29

Correlation Coefficient

Columbia Total  Columbia Pacific/asia

Modest diversification

The 3 months correlation between Columbia and Columbia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Total Return and Columbia Pacificasia Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Pacific/asia and Columbia Total 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 Total Return are associated (or correlated) with Columbia Pacific/asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Pacific/asia has no effect on the direction of Columbia Total i.e., Columbia Total and Columbia Pacific/asia go up and down completely randomly.

Pair Corralation between Columbia Total and Columbia Pacific/asia

Assuming the 90 days horizon Columbia Total Return is expected to generate 0.17 times more return on investment than Columbia Pacific/asia. However, Columbia Total Return is 5.78 times less risky than Columbia Pacific/asia. It trades about -0.1 of its potential returns per unit of risk. Columbia Pacificasia Fund is currently generating about -0.1 per unit of risk. If you would invest  3,022  in Columbia Total Return on October 6, 2024 and sell it today you would lose (46.00) from holding Columbia Total Return or give up 1.52% of portfolio value over 90 days.

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

Columbia Total Return  vs.  Columbia Pacificasia Fund

Columbia Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Pacific/asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Pacificasia Fund 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.

Pair Trading with Columbia Total and Columbia Pacific/asia

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

The idea behind Columbia Total Return and Columbia Pacificasia Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.