Correlation Between Columbia Corporate and Columbia Mid

Can any of the company-specific risk be diversified away by investing in both Columbia Corporate and Columbia Mid 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 Mid 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 Mid Cap, you can compare the effects of market volatilities on Columbia Corporate and Columbia Mid 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 Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Corporate and Columbia Mid.

Diversification Opportunities for Columbia Corporate and Columbia Mid

-0.12

Correlation Coefficient

Columbia Corporate  Columbia Mid

Good diversification

The 3 months correlation between Columbia and Columbia is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Corporate Income and Columbia Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Mid Cap 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 Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Mid Cap has no effect on the direction of Columbia Corporate i.e., Columbia Corporate and Columbia Mid go up and down completely randomly.

Pair Corralation between Columbia Corporate and Columbia Mid

Assuming the 90 days horizon Columbia Corporate Income is expected to generate 0.18 times more return on investment than Columbia Mid. However, Columbia Corporate Income is 5.52 times less risky than Columbia Mid. It trades about 0.26 of its potential returns per unit of risk. Columbia Mid Cap is currently generating about 0.04 per unit of risk. If you would invest  919.00  in Columbia Corporate Income on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Columbia Corporate Income or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	14.29%
Values	Daily Returns

Columbia Corporate Income  vs.  Columbia Mid Cap

Columbia Corporate Income

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Corporate Income are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. 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 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.

Pair Trading with Columbia Corporate and Columbia Mid

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

The idea behind Columbia Corporate Income and Columbia Mid 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.