Correlation Between Columbia Mid and Columbia Convertible

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

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

Diversification Opportunities for Columbia Mid and Columbia Convertible

0.95

Correlation Coefficient

Columbia Mid  Columbia Convertible

Almost no diversification

The 3 months correlation between Columbia and Columbia is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Mid Cap and Columbia Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and Columbia Mid 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 Mid Cap are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Columbia Mid i.e., Columbia Mid and Columbia Convertible go up and down completely randomly.

Pair Corralation between Columbia Mid and Columbia Convertible

Assuming the 90 days horizon Columbia Mid is expected to generate 1.28 times less return on investment than Columbia Convertible. In addition to that, Columbia Mid is 1.64 times more volatile than Columbia Vertible Securities. It trades about 0.15 of its total potential returns per unit of risk. Columbia Vertible Securities is currently generating about 0.32 per unit of volatility. If you would invest  2,061  in Columbia Vertible Securities on August 31, 2024 and sell it today you would earn a total of  193.00  from holding Columbia Vertible Securities or generate 9.36% return on investment over 90 days.

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

Columbia Mid Cap  vs.  Columbia Vertible Securities

Columbia Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Mid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Columbia Convertible

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Vertible Securities are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Columbia Convertible may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Columbia Mid and Columbia Convertible

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

The idea behind Columbia Mid Cap and Columbia Vertible Securities 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 CEOs Directory module to screen CEOs from public companies around the world.