Correlation Between Equity Growth and Columbia Growth
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Columbia Growth 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 Equity Growth and Columbia Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Columbia Growth 529, you can compare the effects of market volatilities on Equity Growth and Columbia Growth 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 Equity Growth with a short position of Columbia Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Columbia Growth.
Diversification Opportunities for Equity Growth and Columbia Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Equity and Columbia is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Columbia Growth 529 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Growth 529 and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Columbia Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Growth 529 has no effect on the direction of Equity Growth i.e., Equity Growth and Columbia Growth go up and down completely randomly.
Pair Corralation between Equity Growth and Columbia Growth
Assuming the 90 days horizon Equity Growth Fund is expected to generate 1.31 times more return on investment than Columbia Growth. However, Equity Growth is 1.31 times more volatile than Columbia Growth 529. It trades about 0.2 of its potential returns per unit of risk. Columbia Growth 529 is currently generating about 0.21 per unit of risk. If you would invest 3,313 in Equity Growth Fund on August 31, 2024 and sell it today you would earn a total of 123.00 from holding Equity Growth Fund or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Fund vs. Columbia Growth 529
Performance |
| Timeline |
| Equity Growth |
| Columbia Growth 529 |
Equity Growth and Columbia Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Columbia Growth
The main advantage of trading using opposite Equity Growth and Columbia Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Columbia Growth 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 Growth will offset losses from the drop in Columbia Growth's long position.| Equity Growth vs. Goldman Sachs Short Term | Equity Growth vs. Vanguard Institutional Short Term | Equity Growth vs. Sterling Capital Short | Equity Growth vs. Touchstone Ultra Short |
| Columbia Growth vs. Virtus Nfj Large Cap | Columbia Growth vs. Touchstone Large Cap | Columbia Growth vs. Dana Large Cap | Columbia Growth vs. Jhancock Disciplined Value |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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