Correlation Between Columbia Mid and Redwood Managed

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

Diversification Opportunities for Columbia Mid and Redwood Managed

-0.54

Correlation Coefficient

Columbia Mid  Redwood Managed

Excellent diversification

The 3 months correlation between Columbia and Redwood is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Mid Cap and Redwood Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Managed Municipal 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 Redwood Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Managed Municipal has no effect on the direction of Columbia Mid i.e., Columbia Mid and Redwood Managed go up and down completely randomly.

Pair Corralation between Columbia Mid and Redwood Managed

If you would invest  1,528  in Columbia Mid Cap on September 2, 2024 and sell it today you would earn a total of  95.00  from holding Columbia Mid Cap or generate 6.22% return on investment over 90 days.

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

Columbia Mid Cap  vs.  Redwood Managed Municipal

Columbia Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Mid Cap are ranked lower than 12 (%) 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 January 2025.

Redwood Managed Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redwood Managed Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Redwood Managed 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 Mid and Redwood Managed

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

The idea behind Columbia Mid Cap and Redwood Managed Municipal 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.