Correlation Between Columbia Global and Great West

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

Diversification Opportunities for Columbia Global and Great West

0.94

Correlation Coefficient

Columbia Global  Great West

Almost no diversification

The 3 months correlation between Columbia and Great is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and Great West Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Sp 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Sp has no effect on the direction of Columbia Global i.e., Columbia Global and Great West go up and down completely randomly.

Pair Corralation between Columbia Global and Great West

Assuming the 90 days horizon Columbia Global is expected to generate 3.55 times less return on investment than Great West. In addition to that, Columbia Global is 1.89 times more volatile than Great West Sp 500. It trades about 0.02 of its total potential returns per unit of risk. Great West Sp 500 is currently generating about 0.16 per unit of volatility. If you would invest  3,850  in Great West Sp 500 on September 13, 2024 and sell it today you would earn a total of  68.00  from holding Great West Sp 500 or generate 1.77% 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.  Great West Sp 500

Columbia Global Tech

Risk-Adjusted Performance

10 of 100

Good

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 January 2025.

Great West Sp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Sp 500 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Great West may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Global and Great West

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

The idea behind Columbia Global Technology and Great West 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.