Correlation Between Shenkman Short and Columbia Integrated

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

By analyzing existing cross correlation between Shenkman Short Duration and Columbia Integrated Large, you can compare the effects of market volatilities on Shenkman Short 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 Shenkman Short with a short position of Columbia Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenkman Short and Columbia Integrated.

Diversification Opportunities for Shenkman Short and Columbia Integrated

0.9

Correlation Coefficient

Shenkman Short  Columbia Integrated

Almost no diversification

The 3 months correlation between Shenkman and Columbia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shenkman Short Duration 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 Shenkman Short 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 Shenkman Short Duration 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 Shenkman Short i.e., Shenkman Short and Columbia Integrated go up and down completely randomly.

Pair Corralation between Shenkman Short and Columbia Integrated

Assuming the 90 days horizon Shenkman Short is expected to generate 11.6 times less return on investment than Columbia Integrated. But when comparing it to its historical volatility, Shenkman Short Duration is 7.22 times less risky than Columbia Integrated. It trades about 0.15 of its potential returns per unit of risk. Columbia Integrated Large is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,425  in Columbia Integrated Large on September 5, 2024 and sell it today you would earn a total of  158.00  from holding Columbia Integrated Large or generate 11.09% return on investment over 90 days.

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

Shenkman Short Duration  vs.  Columbia Integrated Large

Shenkman Short Duration

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shenkman Short Duration are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Shenkman Short 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

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Integrated Large are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Columbia Integrated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shenkman Short and Columbia Integrated

The main advantage of trading using opposite Shenkman Short and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenkman Short 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 Shenkman Short Duration 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.