Correlation Between Columbia Ultra and Columbia Integrated

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

Diversification Opportunities for Columbia Ultra and Columbia Integrated

0.85

Correlation Coefficient

Columbia Ultra  Columbia Integrated

Very poor diversification

The 3 months correlation between Columbia and Columbia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Ultra Short and Columbia Integrated Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Integrated Large and Columbia Ultra 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 Ultra Short 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 Large has no effect on the direction of Columbia Ultra i.e., Columbia Ultra and Columbia Integrated go up and down completely randomly.

Pair Corralation between Columbia Ultra and Columbia Integrated

Assuming the 90 days horizon Columbia Ultra is expected to generate 14.57 times less return on investment than Columbia Integrated. But when comparing it to its historical volatility, Columbia Ultra Short is 11.69 times less risky than Columbia Integrated. It trades about 0.16 of its potential returns per unit of risk. Columbia Integrated Large is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,104  in Columbia Integrated Large on September 3, 2024 and sell it today you would earn a total of  277.00  from holding Columbia Integrated Large or generate 13.17% return on investment over 90 days.

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

Columbia Ultra Short  vs.  Columbia Integrated Large

Columbia Ultra Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Ultra Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Integrated Large

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Integrated Large are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Integrated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Ultra and Columbia Integrated

The main advantage of trading using opposite Columbia Ultra and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Ultra 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 Ultra Short and Columbia Integrated Large 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..