Correlation Between Global X and Columbia
Can any of the company-specific risk be diversified away by investing in both Global X and Columbia 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 Global X and Columbia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Columbia EM Core, you can compare the effects of market volatilities on Global X and Columbia 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 Global X with a short position of Columbia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Columbia.
Diversification Opportunities for Global X and Columbia
Poor diversification
The 3 months correlation between Global and Columbia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Columbia EM Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia EM Core and Global X 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 Global X Funds are associated (or correlated) with Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia EM Core has no effect on the direction of Global X i.e., Global X and Columbia go up and down completely randomly.
Pair Corralation between Global X and Columbia
Considering the 90-day investment horizon Global X Funds is expected to under-perform the Columbia. In addition to that, Global X is 1.09 times more volatile than Columbia EM Core. It trades about -0.17 of its total potential returns per unit of risk. Columbia EM Core is currently generating about -0.13 per unit of volatility. If you would invest 3,172 in Columbia EM Core on September 1, 2024 and sell it today you would lose (66.00) from holding Columbia EM Core or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global X Funds vs. Columbia EM Core
Performance |
| Timeline |
| Global X Funds |
| Columbia EM Core |
Global X and Columbia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Columbia
The main advantage of trading using opposite Global X and Columbia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, Columbia 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 will offset losses from the drop in Columbia's long position.| Global X vs. Freedom Day Dividend | Global X vs. iShares MSCI China | Global X vs. iShares Dividend and | Global X vs. SmartETFs Dividend Builder |
| Columbia vs. Xtrackers MSCI Emerging | Columbia vs. FlexShares Morningstar Emerging | Columbia vs. First Trust Emerging |
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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