Correlation Between Columbia Global and Columbia Integrated

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

Diversification Opportunities for Columbia Global and Columbia Integrated

0.84

Correlation Coefficient

Columbia Global  Columbia Integrated

Very poor diversification

The 3 months correlation between Columbia and Columbia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and Columbia Integrated Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Small 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 Columbia Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Integrated Small has no effect on the direction of Columbia Global i.e., Columbia Global and Columbia Integrated go up and down completely randomly.

Pair Corralation between Columbia Global and Columbia Integrated

Assuming the 90 days horizon Columbia Global is expected to generate 2.06 times less return on investment than Columbia Integrated. But when comparing it to its historical volatility, Columbia Global Technology is 1.45 times less risky than Columbia Integrated. It trades about 0.25 of its potential returns per unit of risk. Columbia Integrated Small is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,454  in Columbia Integrated Small on September 5, 2024 and sell it today you would earn a total of  178.00  from holding Columbia Integrated Small or generate 12.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Columbia Global Technology  vs.  Columbia Integrated Small

Columbia Global Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Integrated Small

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Integrated Small are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Integrated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Global and Columbia Integrated

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

The idea behind Columbia Global Technology and Columbia Integrated Small 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.