Correlation Between Columbia Corporate and Columbia Commodity

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

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

Diversification Opportunities for Columbia Corporate and Columbia Commodity

0.03

Correlation Coefficient

Columbia Corporate  Columbia Commodity

Significant diversification

The 3 months correlation between Columbia and Columbia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Corporate Income and Columbia Modity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Modity Strategy and Columbia Corporate 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 Corporate Income are associated (or correlated) with Columbia Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Modity Strategy has no effect on the direction of Columbia Corporate i.e., Columbia Corporate and Columbia Commodity go up and down completely randomly.

Pair Corralation between Columbia Corporate and Columbia Commodity

Assuming the 90 days horizon Columbia Corporate is expected to generate 1.83 times less return on investment than Columbia Commodity. But when comparing it to its historical volatility, Columbia Corporate Income is 2.64 times less risky than Columbia Commodity. It trades about 0.17 of its potential returns per unit of risk. Columbia Modity Strategy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  948.00  in Columbia Modity Strategy on December 2, 2024 and sell it today you would earn a total of  34.00  from holding Columbia Modity Strategy or generate 3.59% return on investment over 90 days.

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

Columbia Corporate Income  vs.  Columbia Modity Strategy

Columbia Corporate Income

Risk-Adjusted Performance

Very Weak

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

Columbia Modity Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Modity Strategy are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Columbia Corporate and Columbia Commodity

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

The idea behind Columbia Corporate Income and Columbia Modity Strategy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..