Correlation Between Columbia Small and American Growth
Can any of the company-specific risk be diversified away by investing in both Columbia Small and American 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 Columbia Small and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Small Cap and American Growth Fund, you can compare the effects of market volatilities on Columbia Small and American 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 Columbia Small with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and American Growth.
Diversification Opportunities for Columbia Small and American Growth
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and American is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Columbia Small 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 Small Cap are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Columbia Small i.e., Columbia Small and American Growth go up and down completely randomly.
Pair Corralation between Columbia Small and American Growth
Assuming the 90 days horizon Columbia Small Cap is expected to generate 1.2 times more return on investment than American Growth. However, Columbia Small is 1.2 times more volatile than American Growth Fund. It trades about 0.02 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.03 per unit of risk. If you would invest 5,036 in Columbia Small Cap on November 2, 2024 and sell it today you would earn a total of 542.00 from holding Columbia Small Cap or generate 10.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Small Cap vs. American Growth Fund
Performance |
| Timeline |
| Columbia Small Cap |
| American Growth |
Columbia Small and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Small and American Growth
The main advantage of trading using opposite Columbia Small and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small position performs unexpectedly, American 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 American Growth will offset losses from the drop in American Growth's long position.| Columbia Small vs. Aqr Long Short Equity | Columbia Small vs. Locorr Dynamic Equity | Columbia Small vs. Transamerica International Equity | Columbia Small vs. Doubleline Core Fixed |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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