Correlation Between Mid Cap and Columbia Integrated

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

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

Diversification Opportunities for Mid Cap and Columbia Integrated

0.7

Correlation Coefficient

Mid Cap  Columbia Integrated

Poor diversification

The 3 months correlation between Mid and Columbia is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth 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 Mid Cap 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 Mid Cap Growth 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 Mid Cap i.e., Mid Cap and Columbia Integrated go up and down completely randomly.

Pair Corralation between Mid Cap and Columbia Integrated

Assuming the 90 days horizon Mid Cap Growth is expected to generate 0.75 times more return on investment than Columbia Integrated. However, Mid Cap Growth is 1.33 times less risky than Columbia Integrated. It trades about 0.11 of its potential returns per unit of risk. Columbia Integrated Large is currently generating about -0.01 per unit of risk. If you would invest  3,618  in Mid Cap Growth on September 27, 2024 and sell it today you would earn a total of  293.00  from holding Mid Cap Growth or generate 8.1% return on investment over 90 days.

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

Mid Cap Growth  vs.  Columbia Integrated Large

Mid Cap Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Columbia Integrated Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid Cap and Columbia Integrated

The main advantage of trading using opposite Mid Cap and Columbia Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap Growth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.