Correlation Between Columbia Large and Nationwide

Can any of the company-specific risk be diversified away by investing in both Columbia Large and Nationwide 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 Nationwide 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 Nationwide Sp 500, you can compare the effects of market volatilities on Columbia Large and Nationwide 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 Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Large and Nationwide.

Diversification Opportunities for Columbia Large and Nationwide

1.0

Correlation Coefficient

Columbia Large  Nationwide

No risk reduction

The 3 months correlation between Columbia and Nationwide is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Large Cap and Nationwide Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Sp 500 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 Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Sp 500 has no effect on the direction of Columbia Large i.e., Columbia Large and Nationwide go up and down completely randomly.

Pair Corralation between Columbia Large and Nationwide

Assuming the 90 days horizon Columbia Large Cap is expected to generate 1.0 times more return on investment than Nationwide. However, Columbia Large is 1.0 times more volatile than Nationwide Sp 500. It trades about 0.19 of its potential returns per unit of risk. Nationwide Sp 500 is currently generating about 0.19 per unit of risk. If you would invest  6,179  in Columbia Large Cap on September 12, 2024 and sell it today you would earn a total of  503.00  from holding Columbia Large Cap or generate 8.14% return on investment over 90 days.

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

Columbia Large Cap  vs.  Nationwide Sp 500

Columbia Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nationwide Sp 500

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Sp 500 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Large and Nationwide

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

The idea behind Columbia Large Cap and Nationwide Sp 500 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.