Correlation Between Columbia Limited and SPDR Russell

Can any of the company-specific risk be diversified away by investing in both Columbia Limited and SPDR Russell 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 Limited and SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Limited Duration and SPDR Russell 1000, you can compare the effects of market volatilities on Columbia Limited and SPDR Russell 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 Limited with a short position of SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Limited and SPDR Russell.

Diversification Opportunities for Columbia Limited and SPDR Russell

0.55

Correlation Coefficient

Columbia Limited  SPDR Russell

Very weak diversification

The 3 months correlation between Columbia and SPDR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Limited Duration and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 and Columbia Limited 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 Limited Duration are associated (or correlated) with SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of Columbia Limited i.e., Columbia Limited and SPDR Russell go up and down completely randomly.

Pair Corralation between Columbia Limited and SPDR Russell

Assuming the 90 days horizon Columbia Limited Duration is expected to generate 0.21 times more return on investment than SPDR Russell. However, Columbia Limited Duration is 4.78 times less risky than SPDR Russell. It trades about -0.14 of its potential returns per unit of risk. SPDR Russell 1000 is currently generating about -0.19 per unit of risk. If you would invest  967.00  in Columbia Limited Duration on January 25, 2024 and sell it today you would lose (5.00) from holding Columbia Limited Duration or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Columbia Limited Duration  vs.  SPDR Russell 1000

Columbia Limited Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Limited Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SPDR Russell 1000

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Russell 1000 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, SPDR Russell is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Columbia Limited and SPDR Russell

The main advantage of trading using opposite Columbia Limited and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Limited position performs unexpectedly, SPDR Russell 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 SPDR Russell will offset losses from the drop in SPDR Russell's long position.

The idea behind Columbia Limited Duration and SPDR Russell 1000 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.