Correlation Between Columbia Convertible and Pear Tree

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

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

Diversification Opportunities for Columbia Convertible and Pear Tree

-0.5

Correlation Coefficient

Columbia Convertible  Pear Tree

Very good diversification

The 3 months correlation between Columbia and Pear is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Vertible Securities and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Columbia Convertible 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 Vertible Securities are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Columbia Convertible i.e., Columbia Convertible and Pear Tree go up and down completely randomly.

Pair Corralation between Columbia Convertible and Pear Tree

Assuming the 90 days horizon Columbia Vertible Securities is expected to generate 0.81 times more return on investment than Pear Tree. However, Columbia Vertible Securities is 1.23 times less risky than Pear Tree. It trades about 0.58 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.15 per unit of risk. If you would invest  2,199  in Columbia Vertible Securities on September 2, 2024 and sell it today you would earn a total of  135.00  from holding Columbia Vertible Securities or generate 6.14% return on investment over 90 days.

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

Columbia Vertible Securities  vs.  Pear Tree Polaris

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 basic indicators, Columbia Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pear Tree Polaris

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Columbia Convertible and Pear Tree

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

The idea behind Columbia Vertible Securities and Pear Tree Polaris 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.