Correlation Between Columbia Income and Columbia Greater

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

By analyzing existing cross correlation between Columbia Income Builder and Columbia Greater China, you can compare the effects of market volatilities on Columbia Income and Columbia Greater 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 Income with a short position of Columbia Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Income and Columbia Greater.

Diversification Opportunities for Columbia Income and Columbia Greater

-0.35

Correlation Coefficient

Columbia Income  Columbia Greater

Very good diversification

The 3 months correlation between Columbia and Columbia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Income Builder and Columbia Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Greater China and Columbia Income 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 Income Builder are associated (or correlated) with Columbia Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Greater China has no effect on the direction of Columbia Income i.e., Columbia Income and Columbia Greater go up and down completely randomly.

Pair Corralation between Columbia Income and Columbia Greater

Assuming the 90 days horizon Columbia Income Builder is expected to under-perform the Columbia Greater. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Income Builder is 9.55 times less risky than Columbia Greater. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Columbia Greater China is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,904  in Columbia Greater China on September 13, 2024 and sell it today you would earn a total of  524.00  from holding Columbia Greater China or generate 18.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Columbia Income Builder  vs.  Columbia Greater China

Columbia Income Builder

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Greater China

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Greater China are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Greater showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Income and Columbia Greater

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

The idea behind Columbia Income Builder and Columbia Greater China 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.