Correlation Between Columbia Global and Global Technology

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Can any of the company-specific risk be diversified away by investing in both Columbia Global and Global Technology 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 Columbia Global and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Global Technology and Global Technology Portfolio, you can compare the effects of market volatilities on Columbia Global and Global Technology 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 Columbia Global with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Global and Global Technology.

Diversification Opportunities for Columbia Global and Global Technology

ColumbiaGlobalDiversified AwayColumbiaGlobalDiversified Away100%
0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Columbia and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Columbia Global 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 Columbia Global Technology are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Columbia Global i.e., Columbia Global and Global Technology go up and down completely randomly.

Pair Corralation between Columbia Global and Global Technology

Assuming the 90 days horizon Columbia Global Technology is expected to under-perform the Global Technology. In addition to that, Columbia Global is 1.2 times more volatile than Global Technology Portfolio. It trades about -0.07 of its total potential returns per unit of risk. Global Technology Portfolio is currently generating about -0.05 per unit of volatility. If you would invest  2,170  in Global Technology Portfolio on December 3, 2024 and sell it today you would lose (94.00) from holding Global Technology Portfolio or give up 4.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.36%
ValuesDaily Returns

Columbia Global Technology  vs.  Global Technology Portfolio

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15CGTUX JGLTX
       Timeline  
Columbia Global Tech 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Columbia Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar9092949698100
Global Technology 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Global Technology Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15JanFebFebMar20.52121.522

Columbia Global and Global Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.65-1.98-1.32-0.650.00.611.221.842.45 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CGTUX JGLTX
       Returns  

Pair Trading with Columbia Global and Global Technology

The main advantage of trading using opposite Columbia Global and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Global position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.
The idea behind Columbia Global Technology and Global Technology Portfolio 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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