Correlation Between Balanced Fund and Columbia Integrated

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

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

Diversification Opportunities for Balanced Fund and Columbia Integrated

0.15

Correlation Coefficient

Balanced Fund  Columbia Integrated

Average diversification

The 3 months correlation between Balanced and Columbia is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Columbia Integrated Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Large and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Large has no effect on the direction of Balanced Fund i.e., Balanced Fund and Columbia Integrated go up and down completely randomly.

Pair Corralation between Balanced Fund and Columbia Integrated

Assuming the 90 days horizon Balanced Fund Investor is expected to under-perform the Columbia Integrated. But the mutual fund apears to be less risky and, when comparing its historical volatility, Balanced Fund Investor is 1.42 times less risky than Columbia Integrated. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Columbia Integrated Large is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,463  in Columbia Integrated Large on October 3, 2024 and sell it today you would earn a total of  115.00  from holding Columbia Integrated Large or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	62.9%
Values	Daily Returns

Balanced Fund Investor  vs.  Columbia Integrated Large

Balanced Fund Investor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Integrated Large

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Columbia Integrated Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak technical and fundamental indicators, Columbia Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Balanced Fund and Columbia Integrated

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

The idea behind Balanced Fund Investor and Columbia Integrated Large 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.