Correlation Between Columbia Select and Century Small

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

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

Diversification Opportunities for Columbia Select and Century Small

0.87

Correlation Coefficient

Columbia Select  Century Small

Very poor diversification

The 3 months correlation between Columbia and Century is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Select Large and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap and Columbia Select 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 Select Large are associated (or correlated) with Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of Columbia Select i.e., Columbia Select and Century Small go up and down completely randomly.

Pair Corralation between Columbia Select and Century Small

Assuming the 90 days horizon Columbia Select Large is expected to under-perform the Century Small. In addition to that, Columbia Select is 1.33 times more volatile than Century Small Cap. It trades about -0.17 of its total potential returns per unit of risk. Century Small Cap is currently generating about -0.16 per unit of volatility. If you would invest  4,354  in Century Small Cap on December 4, 2024 and sell it today you would lose (506.00) from holding Century Small Cap or give up 11.62% of portfolio value over 90 days.

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

Columbia Select Large  vs.  Century Small Cap

Columbia Select Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Select Large 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 technical and fundamental 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.

Century Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Small 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.

Pair Trading with Columbia Select and Century Small

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

The idea behind Columbia Select Large and Century Small 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.