Correlation Between Columbia Mid and Columbia Integrated

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

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

Diversification Opportunities for Columbia Mid and Columbia Integrated

0.8

Correlation Coefficient

Columbia Mid  Columbia Integrated

Very poor diversification

The 3 months correlation between Columbia and Columbia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Mid Cap and Columbia Integrated Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Large and Columbia Mid 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 Mid Cap are associated (or correlated) with Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Large has no effect on the direction of Columbia Mid i.e., Columbia Mid and Columbia Integrated go up and down completely randomly.

Pair Corralation between Columbia Mid and Columbia Integrated

Assuming the 90 days horizon Columbia Mid is expected to generate 3.68 times less return on investment than Columbia Integrated. In addition to that, Columbia Mid is 1.38 times more volatile than Columbia Integrated Large. It trades about 0.04 of its total potential returns per unit of risk. Columbia Integrated Large is currently generating about 0.22 per unit of volatility. If you would invest  2,202  in Columbia Integrated Large on September 12, 2024 and sell it today you would earn a total of  294.00  from holding Columbia Integrated Large or generate 13.35% return on investment over 90 days.

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

Columbia Mid Cap  vs.  Columbia Integrated Large

Columbia Mid Cap

Risk-Adjusted Performance

3 of 100

Insignificant

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

Columbia Integrated Large

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Integrated Large are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Columbia Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Mid and Columbia Integrated

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

The idea behind Columbia Mid Cap and Columbia Integrated Large 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.