Correlation Between Columbia and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both Columbia and Matthews Emerging 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 and Matthews Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia EM Core and Matthews Emerging Markets, you can compare the effects of market volatilities on Columbia and Matthews Emerging 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 with a short position of Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia and Matthews Emerging.
Diversification Opportunities for Columbia and Matthews Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Columbia and Matthews is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Columbia EM Core and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Emerging Markets and Columbia 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 EM Core are associated (or correlated) with Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of Columbia i.e., Columbia and Matthews Emerging go up and down completely randomly.
Pair Corralation between Columbia and Matthews Emerging
Given the investment horizon of 90 days Columbia is expected to generate 1.26 times less return on investment than Matthews Emerging. In addition to that, Columbia is 1.13 times more volatile than Matthews Emerging Markets. It trades about 0.02 of its total potential returns per unit of risk. Matthews Emerging Markets is currently generating about 0.03 per unit of volatility. If you would invest 2,873 in Matthews Emerging Markets on September 2, 2024 and sell it today you would earn a total of 97.00 from holding Matthews Emerging Markets or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia EM Core vs. Matthews Emerging Markets
Performance |
| Timeline |
| Columbia EM Core |
| Matthews Emerging Markets |
Columbia and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia and Matthews Emerging
The main advantage of trading using opposite Columbia and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia position performs unexpectedly, Matthews Emerging 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 Matthews Emerging will offset losses from the drop in Matthews Emerging's long position.| Columbia vs. iShares MSCI Emerging | Columbia vs. Hartford Multifactor Emerging | Columbia vs. SPDR MSCI Emerging | Columbia vs. FlexShares Morningstar Emerging |
| Matthews Emerging vs. Xtrackers MSCI Emerging | Matthews Emerging vs. FlexShares Morningstar Emerging | Matthews Emerging 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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