Correlation Between Columbia Select and Madison Mid

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

By analyzing existing cross correlation between Columbia Select Large Cap and Madison Mid Cap, you can compare the effects of market volatilities on Columbia Select and Madison Mid 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 Select with a short position of Madison Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Select and Madison Mid.

Diversification Opportunities for Columbia Select and Madison Mid

-0.1

Correlation Coefficient

Columbia Select  Madison Mid

Good diversification

The 3 months correlation between Columbia and Madison is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Select Large Cap and Madison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Mid Cap and Columbia Select 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 Select Large Cap are associated (or correlated) with Madison Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Mid Cap has no effect on the direction of Columbia Select i.e., Columbia Select and Madison Mid go up and down completely randomly.

Pair Corralation between Columbia Select and Madison Mid

Assuming the 90 days horizon Columbia Select Large Cap is expected to generate 0.79 times more return on investment than Madison Mid. However, Columbia Select Large Cap is 1.26 times less risky than Madison Mid. It trades about 0.19 of its potential returns per unit of risk. Madison Mid Cap is currently generating about -0.03 per unit of risk. If you would invest  3,882  in Columbia Select Large Cap on August 14, 2025 and sell it today you would earn a total of  329.00  from holding Columbia Select Large Cap or generate 8.48% return on investment over 90 days.

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

Columbia Select Large Cap  vs.  Madison Mid Cap

Columbia Select Large

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Select Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Select may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Madison Mid Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days Madison Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Madison Mid 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 Select and Madison Mid

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

The idea behind Columbia Select Large Cap and Madison Mid Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.