Correlation Between Multi Manager and Columbia Small
Can any of the company-specific risk be diversified away by investing in both Multi Manager and Columbia Small 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 Multi Manager and Columbia Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager Directional Alternative and Columbia Small Cap, you can compare the effects of market volatilities on Multi Manager and Columbia Small 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 Multi Manager with a short position of Columbia Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Columbia Small.
Diversification Opportunities for Multi Manager and Columbia Small
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi and Columbia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small Cap and Multi Manager 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 Multi Manager Directional Alternative are associated (or correlated) with Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Multi Manager i.e., Multi Manager and Columbia Small go up and down completely randomly.
Pair Corralation between Multi Manager and Columbia Small
Assuming the 90 days horizon Multi Manager is expected to generate 1.58 times less return on investment than Columbia Small. But when comparing it to its historical volatility, Multi Manager Directional Alternative is 2.54 times less risky than Columbia Small. It trades about 0.16 of its potential returns per unit of risk. Columbia Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,275 in Columbia Small Cap on September 14, 2024 and sell it today you would earn a total of 768.00 from holding Columbia Small Cap or generate 33.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager Directional Alte vs. Columbia Small Cap
Performance |
| Timeline |
| Multi Manager Direct |
| Columbia Small Cap |
Multi Manager and Columbia Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Manager and Columbia Small
The main advantage of trading using opposite Multi Manager and Columbia Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager position performs unexpectedly, Columbia Small 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 Small will offset losses from the drop in Columbia Small's long position.| Multi Manager vs. John Hancock Ii | Multi Manager vs. Queens Road Small | Multi Manager vs. Royce Opportunity Fund | Multi Manager vs. Ab Small Cap |
| Columbia Small vs. Pender Real Estate | Columbia Small vs. Prudential Real Estate | Columbia Small vs. Nexpoint Real Estate | Columbia Small vs. Fidelity Real Estate |
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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