Correlation Between Ultrasmall Cap and Columbia Large

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

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

Diversification Opportunities for Ultrasmall Cap and Columbia Large

0.84

Correlation Coefficient

Ultrasmall Cap  Columbia Large

Very poor diversification

The 3 months correlation between Ultrasmall and Columbia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm 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 Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap 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 Ultrasmall Cap i.e., Ultrasmall Cap and Columbia Large go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Columbia Large

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to under-perform the Columbia Large. In addition to that, Ultrasmall Cap is 1.38 times more volatile than Columbia Large Cap. It trades about -0.12 of its total potential returns per unit of risk. Columbia Large Cap is currently generating about -0.11 per unit of volatility. If you would invest  1,794  in Columbia Large Cap on December 26, 2024 and sell it today you would lose (216.00) from holding Columbia Large Cap or give up 12.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Ultrasmall Cap Profund Ultrasm  vs.  Columbia Large Cap

Ultrasmall Cap Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultrasmall Cap Profund Ultrasmall Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Columbia Large Cap

Risk-Adjusted Performance

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ultrasmall Cap and Columbia Large

The main advantage of trading using opposite Ultrasmall Cap and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.