Correlation Between Columbia Small and State Street
Can any of the company-specific risk be diversified away by investing in both Columbia Small and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on Columbia Small and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and State Street.
Diversification Opportunities for Columbia Small and State Street
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Columbia and State is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Columbia Small i.e., Columbia Small and State Street go up and down completely randomly.
Pair Corralation between Columbia Small and State Street
Assuming the 90 days horizon Columbia Small Cap is expected to generate 2.59 times more return on investment than State Street. However, Columbia Small is 2.59 times more volatile than State Street Target. It trades about 0.05 of its potential returns per unit of risk. State Street Target is currently generating about 0.11 per unit of risk. If you would invest 5,143 in Columbia Small Cap on September 3, 2024 and sell it today you would earn a total of 649.00 from holding Columbia Small Cap or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.68% |
| Values | Daily Returns |
Columbia Small Cap vs. State Street Target
Performance |
| Timeline |
| Columbia Small Cap |
| State Street Target |
Columbia Small and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Small and State Street
The main advantage of trading using opposite Columbia Small and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Columbia Small vs. T Rowe Price | Columbia Small vs. Metropolitan West High | Columbia Small vs. Artisan High Income | Columbia Small vs. Calvert High Yield |
| State Street vs. Lord Abbett Diversified | State Street vs. Wasatch Small Cap | State Street vs. Adams Diversified Equity | State Street vs. Sentinel Small Pany |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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