Correlation Between Pace International and Columbia Integrated

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

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

Diversification Opportunities for Pace International and Columbia Integrated

-0.19

Correlation Coefficient

Pace International  Columbia Integrated

Good diversification

The 3 months correlation between Pace and Columbia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging 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 Pace International 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 Pace International Emerging 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 Pace International i.e., Pace International and Columbia Integrated go up and down completely randomly.

Pair Corralation between Pace International and Columbia Integrated

Assuming the 90 days horizon Pace International is expected to generate 5.69 times less return on investment than Columbia Integrated. But when comparing it to its historical volatility, Pace International Emerging is 1.31 times less risky than Columbia Integrated. It trades about 0.02 of its potential returns per unit of risk. Columbia Integrated Large is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,444  in Columbia Integrated Large on September 26, 2024 and sell it today you would earn a total of  810.00  from holding Columbia Integrated Large or generate 56.09% return on investment over 90 days.

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

Pace International Emerging  vs.  Columbia Integrated Large

Pace International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace International Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Columbia Integrated Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pace International and Columbia Integrated

The main advantage of trading using opposite Pace International and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International 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 Pace International Emerging 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.