Correlation Between Columbia Large and Conestoga Smid

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

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

Diversification Opportunities for Columbia Large and Conestoga Smid

0.88

Correlation Coefficient

Columbia Large  Conestoga Smid

Very poor diversification

The 3 months correlation between Columbia and Conestoga is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Large Cap and Conestoga Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conestoga Smid Cap and Columbia Large 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 Large Cap are associated (or correlated) with Conestoga Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conestoga Smid Cap has no effect on the direction of Columbia Large i.e., Columbia Large and Conestoga Smid go up and down completely randomly.

Pair Corralation between Columbia Large and Conestoga Smid

Assuming the 90 days horizon Columbia Large is expected to generate 3.35 times less return on investment than Conestoga Smid. But when comparing it to its historical volatility, Columbia Large Cap is 1.26 times less risky than Conestoga Smid. It trades about 0.06 of its potential returns per unit of risk. Conestoga Smid Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,566  in Conestoga Smid Cap on September 13, 2024 and sell it today you would earn a total of  248.00  from holding Conestoga Smid Cap or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Columbia Large Cap  vs.  Conestoga Smid Cap

Columbia Large Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Conestoga Smid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conestoga Smid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Conestoga Smid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Large and Conestoga Smid

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

The idea behind Columbia Large Cap and Conestoga Smid 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.