Correlation Between Saat Market and Columbia Large

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

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

Diversification Opportunities for Saat Market and Columbia Large

0.34

Correlation Coefficient

Saat Market  Columbia Large

Weak diversification

The 3 months correlation between Saat and Columbia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Saat Market Growth 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 Saat Market 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 Saat Market Growth 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 Saat Market i.e., Saat Market and Columbia Large go up and down completely randomly.

Pair Corralation between Saat Market and Columbia Large

Assuming the 90 days horizon Saat Market Growth is expected to under-perform the Columbia Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Saat Market Growth is 1.37 times less risky than Columbia Large. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Columbia Large Cap is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,919  in Columbia Large Cap on October 10, 2024 and sell it today you would lose (123.00) from holding Columbia Large Cap or give up 1.55% of portfolio value over 90 days.

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

Saat Market Growth  vs.  Columbia Large Cap

Saat Market Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saat Market Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Saat Market 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 Saat Market and Columbia Large

The main advantage of trading using opposite Saat Market and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saat Market 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 Saat Market Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.