Correlation Between Wasatch E and Columbia Minnesota

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

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

Diversification Opportunities for Wasatch E and Columbia Minnesota

0.1

Correlation Coefficient

Wasatch E  Columbia Minnesota

Average diversification

The 3 months correlation between Wasatch and Columbia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch E Growth and Columbia Minnesota Tax Exempt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Minnesota Tax and Wasatch E 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 Wasatch E Growth are associated (or correlated) with Columbia Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Minnesota Tax has no effect on the direction of Wasatch E i.e., Wasatch E and Columbia Minnesota go up and down completely randomly.

Pair Corralation between Wasatch E and Columbia Minnesota

Assuming the 90 days horizon Wasatch E Growth is expected to generate 3.46 times more return on investment than Columbia Minnesota. However, Wasatch E is 3.46 times more volatile than Columbia Minnesota Tax Exempt. It trades about 0.16 of its potential returns per unit of risk. Columbia Minnesota Tax Exempt is currently generating about 0.04 per unit of risk. If you would invest  9,592  in Wasatch E Growth on September 13, 2024 and sell it today you would earn a total of  1,054  from holding Wasatch E Growth or generate 10.99% return on investment over 90 days.

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

Wasatch E Growth  vs.  Columbia Minnesota Tax Exempt

Wasatch E Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch E Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wasatch E may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Columbia Minnesota Tax

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Minnesota Tax Exempt are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Minnesota is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wasatch E and Columbia Minnesota

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

The idea behind Wasatch E Growth and Columbia Minnesota Tax Exempt 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.