Correlation Between Multi Manager and Columbia Global

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

By analyzing existing cross correlation between Multi Manager Directional Alternative and Columbia Global Equity, you can compare the effects of market volatilities on Multi Manager and Columbia Global 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 Multi Manager with a short position of Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Columbia Global.

Diversification Opportunities for Multi Manager and Columbia Global

0.85

Correlation Coefficient

Multi Manager  Columbia Global

Very poor diversification

The 3 months correlation between Multi and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte and Columbia Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Equity and Multi Manager 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 Multi Manager Directional Alternative are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Equity has no effect on the direction of Multi Manager i.e., Multi Manager and Columbia Global go up and down completely randomly.

Pair Corralation between Multi Manager and Columbia Global

Assuming the 90 days horizon Multi Manager Directional Alternative is expected to generate 1.36 times more return on investment than Columbia Global. However, Multi Manager is 1.36 times more volatile than Columbia Global Equity. It trades about 0.28 of its potential returns per unit of risk. Columbia Global Equity is currently generating about 0.15 per unit of risk. If you would invest  737.00  in Multi Manager Directional Alternative on September 8, 2024 and sell it today you would earn a total of  99.00  from holding Multi Manager Directional Alternative or generate 13.43% return on investment over 90 days.

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

Multi Manager Directional Alte  vs.  Columbia Global Equity

Multi Manager Direct

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Manager Directional Alternative are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi Manager may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Columbia Global Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multi Manager and Columbia Global

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

The idea behind Multi Manager Directional Alternative and Columbia Global Equity 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.