Correlation Between Columbia Global and Global Technology

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

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

Diversification Opportunities for Columbia Global and Global Technology

1.0

Correlation Coefficient

Columbia Global  Global Technology

No risk reduction

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

Pair Corralation between Columbia Global and Global Technology

Assuming the 90 days horizon Columbia Global Technology is expected to generate 1.05 times more return on investment than Global Technology. However, Columbia Global is 1.05 times more volatile than Global Technology Portfolio. It trades about 0.14 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.14 per unit of risk. If you would invest  8,181  in Columbia Global Technology on August 31, 2024 and sell it today you would earn a total of  873.00  from holding Columbia Global Technology or generate 10.67% return on investment over 90 days.

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

Columbia Global Technology  vs.  Global Technology Portfolio

Columbia Global Tech

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Global Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Columbia Global and Global Technology

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

The idea behind Columbia Global Technology and Global Technology Portfolio 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.