Correlation Between Columbia and Columbia Sustainable

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

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

Diversification Opportunities for Columbia and Columbia Sustainable

0.0

Correlation Coefficient

Columbia  Columbia Sustainable

Pay attention - limited upside

The 3 months correlation between Columbia and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Columbia and Columbia Sustainable Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sustainable and Columbia 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 are associated (or correlated) with Columbia Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sustainable has no effect on the direction of Columbia i.e., Columbia and Columbia Sustainable go up and down completely randomly.

Pair Corralation between Columbia and Columbia Sustainable

If you would invest (100.00) in Columbia Sustainable Equity on December 21, 2024 and sell it today you would earn a total of  100.00  from holding Columbia Sustainable Equity or generate -100.0% return on investment over 90 days.

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

Columbia  vs.  Columbia Sustainable Equity

Columbia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Columbia is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Columbia Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Sustainable Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Columbia Sustainable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Columbia and Columbia Sustainable

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

The idea behind Columbia and Columbia Sustainable 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.