Correlation Between Pfg American and Columbia Large

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

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

Diversification Opportunities for Pfg American and Columbia Large

0.51

Correlation Coefficient

Pfg American  Columbia Large

Very weak diversification

The 3 months correlation between Pfg and Columbia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pfg American Funds and Columbia Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Large Cap and Pfg American 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 Pfg American Funds are associated (or correlated) with Columbia Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Large Cap has no effect on the direction of Pfg American i.e., Pfg American and Columbia Large go up and down completely randomly.

Pair Corralation between Pfg American and Columbia Large

Assuming the 90 days horizon Pfg American Funds is expected to generate 1.03 times more return on investment than Columbia Large. However, Pfg American is 1.03 times more volatile than Columbia Large Cap. It trades about 0.07 of its potential returns per unit of risk. Columbia Large Cap is currently generating about 0.06 per unit of risk. If you would invest  954.00  in Pfg American Funds on October 23, 2024 and sell it today you would earn a total of  299.00  from holding Pfg American Funds or generate 31.34% return on investment over 90 days.

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

Pfg American Funds  vs.  Columbia Large Cap

Pfg American Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pfg American and Columbia Large

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

The idea behind Pfg American Funds and Columbia Large 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.