Correlation Between Columbia Integrated and Columbia Select
Can any of the company-specific risk be diversified away by investing in both Columbia Integrated and Columbia Select 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 Integrated and Columbia Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Integrated Large and Columbia Select Smaller Cap, you can compare the effects of market volatilities on Columbia Integrated and Columbia Select 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 Integrated with a short position of Columbia Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Integrated and Columbia Select.
Diversification Opportunities for Columbia Integrated and Columbia Select
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Columbia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Integrated Large and Columbia Select Smaller Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Smaller and Columbia Integrated 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 Integrated Large are associated (or correlated) with Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Smaller has no effect on the direction of Columbia Integrated i.e., Columbia Integrated and Columbia Select go up and down completely randomly.
Pair Corralation between Columbia Integrated and Columbia Select
Assuming the 90 days horizon Columbia Integrated is expected to generate 1.16 times less return on investment than Columbia Select. But when comparing it to its historical volatility, Columbia Integrated Large is 1.05 times less risky than Columbia Select. It trades about 0.09 of its potential returns per unit of risk. Columbia Select Smaller Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,856 in Columbia Select Smaller Cap on August 25, 2024 and sell it today you would earn a total of 424.00 from holding Columbia Select Smaller Cap or generate 22.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Integrated Large vs. Columbia Select Smaller Cap
Performance |
| Timeline |
| Columbia Integrated Large |
| Columbia Select Smaller |
Columbia Integrated and Columbia Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Integrated and Columbia Select
The main advantage of trading using opposite Columbia Integrated and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Integrated position performs unexpectedly, Columbia Select 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 Select will offset losses from the drop in Columbia Select's long position.| Columbia Integrated vs. Columbia Ultra Short | Columbia Integrated vs. Columbia Integrated Large | Columbia Integrated vs. Columbia Integrated Large | Columbia Integrated vs. Columbia Integrated Large |
| Columbia Select vs. Columbia Ultra Short | Columbia Select vs. Columbia Integrated Large | Columbia Select vs. Columbia Integrated Large | Columbia Select vs. Columbia Integrated Large |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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