Correlation Between Columbia Conservative and Touchstone Small

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

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

Diversification Opportunities for Columbia Conservative and Touchstone Small

0.14

Correlation Coefficient

Columbia Conservative  Touchstone Small

Average diversification

The 3 months correlation between Columbia and Touchstone is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Conservative E and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Columbia Conservative 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 Conservative E are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Columbia Conservative i.e., Columbia Conservative and Touchstone Small go up and down completely randomly.

Pair Corralation between Columbia Conservative and Touchstone Small

Assuming the 90 days horizon Columbia Conservative E is expected to under-perform the Touchstone Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Conservative E is 6.35 times less risky than Touchstone Small. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Touchstone Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,777  in Touchstone Small Cap on September 16, 2024 and sell it today you would earn a total of  265.00  from holding Touchstone Small Cap or generate 7.02% return on investment over 90 days.

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

Columbia Conservative E  vs.  Touchstone Small Cap

Columbia Conservative

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Conservative E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Columbia Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Small Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Touchstone Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Conservative and Touchstone Small

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

The idea behind Columbia Conservative E and Touchstone Small Cap 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.