Correlation Between College Retirement and Columbia Acorn

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Can any of the company-specific risk be diversified away by investing in both College Retirement and Columbia Acorn 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 College Retirement and Columbia Acorn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Columbia Acorn International, you can compare the effects of market volatilities on College Retirement and Columbia Acorn 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 College Retirement with a short position of Columbia Acorn. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Columbia Acorn.

Diversification Opportunities for College Retirement and Columbia Acorn

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between College and Columbia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Columbia Acorn International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Acorn Inter and College Retirement 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 College Retirement Equities are associated (or correlated) with Columbia Acorn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Acorn Inter has no effect on the direction of College Retirement i.e., College Retirement and Columbia Acorn go up and down completely randomly.

Pair Corralation between College Retirement and Columbia Acorn

Assuming the 90 days trading horizon College Retirement Equities is expected to generate 0.44 times more return on investment than Columbia Acorn. However, College Retirement Equities is 2.25 times less risky than Columbia Acorn. It trades about -0.14 of its potential returns per unit of risk. Columbia Acorn International is currently generating about -0.29 per unit of risk. If you would invest  52,525  in College Retirement Equities on October 7, 2024 and sell it today you would lose (1,496) from holding College Retirement Equities or give up 2.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

College Retirement Equities  vs.  Columbia Acorn International

 Performance 
       Timeline  
College Retirement 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, College Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Columbia Acorn Inter 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Columbia Acorn International has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

College Retirement and Columbia Acorn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with College Retirement and Columbia Acorn

The main advantage of trading using opposite College Retirement and Columbia Acorn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Columbia Acorn 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 Acorn will offset losses from the drop in Columbia Acorn's long position.
The idea behind College Retirement Equities and Columbia Acorn International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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