Correlation Between Columbia Amt-free and Columbia Small

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

By analyzing existing cross correlation between Columbia Amt Free Intermediate and Columbia Small Cap, you can compare the effects of market volatilities on Columbia Amt-free and Columbia Small 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 Amt-free with a short position of Columbia Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Amt-free and Columbia Small.

Diversification Opportunities for Columbia Amt-free and Columbia Small

-0.32

Correlation Coefficient

Columbia Amt-free  Columbia Small

Very good diversification

The 3 months correlation between Columbia and Columbia is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Amt Free Intermediate and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small Cap and Columbia Amt-free 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 Amt Free Intermediate are associated (or correlated) with Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Columbia Amt-free i.e., Columbia Amt-free and Columbia Small go up and down completely randomly.

Pair Corralation between Columbia Amt-free and Columbia Small

Assuming the 90 days horizon Columbia Amt-free is expected to generate 12.85 times less return on investment than Columbia Small. But when comparing it to its historical volatility, Columbia Amt Free Intermediate is 8.64 times less risky than Columbia Small. It trades about 0.18 of its potential returns per unit of risk. Columbia Small Cap is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,578  in Columbia Small Cap on September 1, 2024 and sell it today you would earn a total of  152.00  from holding Columbia Small Cap or generate 9.63% return on investment over 90 days.

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

Columbia Amt Free Intermediate  vs.  Columbia Small Cap

Columbia Amt Free

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Amt Free Intermediate are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Columbia Amt-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Columbia Amt-free and Columbia Small

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

The idea behind Columbia Amt Free Intermediate and Columbia Small Cap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.