Correlation Between Columbia Diversified and Catalyst Enhanced

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

By analyzing existing cross correlation between Columbia Diversified Equity and Catalyst Enhanced Income, you can compare the effects of market volatilities on Columbia Diversified and Catalyst Enhanced 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 Diversified with a short position of Catalyst Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Diversified and Catalyst Enhanced.

Diversification Opportunities for Columbia Diversified and Catalyst Enhanced

-0.16

Correlation Coefficient

Columbia Diversified  Catalyst Enhanced

Good diversification

The 3 months correlation between Columbia and Catalyst is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Diversified Equity and Catalyst Enhanced Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Enhanced Income and Columbia Diversified 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 Diversified Equity are associated (or correlated) with Catalyst Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Enhanced Income has no effect on the direction of Columbia Diversified i.e., Columbia Diversified and Catalyst Enhanced go up and down completely randomly.

Pair Corralation between Columbia Diversified and Catalyst Enhanced

Assuming the 90 days horizon Columbia Diversified Equity is expected to generate 1.59 times more return on investment than Catalyst Enhanced. However, Columbia Diversified is 1.59 times more volatile than Catalyst Enhanced Income. It trades about 0.17 of its potential returns per unit of risk. Catalyst Enhanced Income is currently generating about -0.08 per unit of risk. If you would invest  1,628  in Columbia Diversified Equity on May 3, 2025 and sell it today you would earn a total of  122.00  from holding Columbia Diversified Equity or generate 7.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Columbia Diversified Equity  vs.  Catalyst Enhanced Income

Columbia Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Diversified Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Diversified may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Catalyst Enhanced Income

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Columbia Diversified and Catalyst Enhanced

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

The idea behind Columbia Diversified Equity and Catalyst Enhanced Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.