Correlation Between Columbia Treasury and Columbia Flexible

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

Diversification Opportunities for Columbia Treasury and Columbia Flexible

ColumbiaColumbiaDiversified AwayColumbiaColumbiaDiversified Away100%
0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Columbia and Columbia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Treasury Index and Columbia Flexible Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Flexible Capital and Columbia Treasury 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 Treasury Index are associated (or correlated) with Columbia Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Flexible Capital has no effect on the direction of Columbia Treasury i.e., Columbia Treasury and Columbia Flexible go up and down completely randomly.

Pair Corralation between Columbia Treasury and Columbia Flexible

Assuming the 90 days horizon Columbia Treasury is expected to generate 2.68 times less return on investment than Columbia Flexible. But when comparing it to its historical volatility, Columbia Treasury Index is 1.31 times less risky than Columbia Flexible. It trades about 0.08 of its potential returns per unit of risk. Columbia Flexible Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,276  in Columbia Flexible Capital on November 24, 2024 and sell it today you would earn a total of  180.00  from holding Columbia Flexible Capital or generate 14.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Columbia Treasury Index  vs.  Columbia Flexible Capital

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -2-1012
JavaScript chart by amCharts 3.21.15CUTRX CFXRX
       Timeline  
Columbia Treasury Index 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Treasury Index are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Treasury 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 3.21.15DecJanFebJanFeb9.659.79.759.89.859.9
Columbia Flexible Capital 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Flexible Capital are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Flexible 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 3.21.15DecJanFebJanFeb1414.114.214.314.414.514.6

Columbia Treasury and Columbia Flexible Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.89-0.62-0.35-0.0930.0078830.110.380.650.92 1234
JavaScript chart by amCharts 3.21.15CUTRX CFXRX
       Returns  

Pair Trading with Columbia Treasury and Columbia Flexible

The main advantage of trading using opposite Columbia Treasury and Columbia Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Treasury position performs unexpectedly, Columbia Flexible 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 Flexible will offset losses from the drop in Columbia Flexible's long position.
The idea behind Columbia Treasury Index and Columbia Flexible Capital 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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