Correlation Between Classic Value and Columbia Select
Can any of the company-specific risk be diversified away by investing in both Classic Value 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 Classic Value and Columbia Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Classic Value Fund and Columbia Select Large, you can compare the effects of market volatilities on Classic Value 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 Classic Value with a short position of Columbia Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Classic Value and Columbia Select.
Diversification Opportunities for Classic Value and Columbia Select
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Classic and Columbia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Classic Value Fund and Columbia Select Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Large and Classic Value 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 Classic Value Fund 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 Large has no effect on the direction of Classic Value i.e., Classic Value and Columbia Select go up and down completely randomly.
Pair Corralation between Classic Value and Columbia Select
Assuming the 90 days horizon Classic Value Fund is expected to under-perform the Columbia Select. In addition to that, Classic Value is 2.6 times more volatile than Columbia Select Large. It trades about -0.12 of its total potential returns per unit of risk. Columbia Select Large is currently generating about -0.05 per unit of volatility. If you would invest 950.00 in Columbia Select Large on November 18, 2024 and sell it today you would lose (56.00) from holding Columbia Select Large or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Classic Value Fund vs. Columbia Select Large
Performance |
| Timeline |
| Classic Value |
| Columbia Select Large |
Classic Value and Columbia Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Classic Value and Columbia Select
The main advantage of trading using opposite Classic Value and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Classic Value 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.| Classic Value vs. Rational Defensive Growth | Classic Value vs. L Abbett Growth | Classic Value vs. Qs Defensive Growth | Classic Value vs. T Rowe Price |
| Columbia Select vs. Columbia Porate Income | Columbia Select vs. Columbia Ultra Short | Columbia Select vs. Columbia Treasury Index | Columbia Select vs. Multi Manager Directional Alternative |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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