Correlation Between Great West and Columbia Global

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

By analyzing existing cross correlation between Great West Loomis Sayles and Columbia Global Equity, you can compare the effects of market volatilities on Great West and Columbia Global 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 Great West with a short position of Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great West and Columbia Global.

Diversification Opportunities for Great West and Columbia Global

0.79

Correlation Coefficient

Great West  Columbia Global

Poor diversification

The 3 months correlation between Great and Columbia is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Great West Loomis Sayles and Columbia Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Equity and Great West 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 Great West Loomis Sayles are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Equity has no effect on the direction of Great West i.e., Great West and Columbia Global go up and down completely randomly.

Pair Corralation between Great West and Columbia Global

Assuming the 90 days horizon Great West is expected to generate 1.16 times less return on investment than Columbia Global. In addition to that, Great West is 1.39 times more volatile than Columbia Global Equity. It trades about 0.13 of its total potential returns per unit of risk. Columbia Global Equity is currently generating about 0.21 per unit of volatility. If you would invest  1,233  in Columbia Global Equity on October 25, 2024 and sell it today you would earn a total of  33.00  from holding Columbia Global Equity or generate 2.68% return on investment over 90 days.

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

Great West Loomis Sayles  vs.  Columbia Global Equity

Great West Loomis

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Loomis Sayles are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Global Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Great West and Columbia Global

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

The idea behind Great West Loomis Sayles and Columbia Global Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.