Correlation Between Columbia Treasury and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Columbia Treasury and Nasdaq-100(r) 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 Treasury and Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Treasury Index and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Columbia Treasury and Nasdaq-100(r) 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 Treasury with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Treasury and Nasdaq-100(r).

Diversification Opportunities for Columbia Treasury and Nasdaq-100(r)

0.35

Correlation Coefficient

Columbia Treasury  Nasdaq-100(r)

Weak diversification

The 3 months correlation between Columbia and Nasdaq-100(r) is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Treasury Index and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Columbia Treasury 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 Treasury Index are associated (or correlated) with Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Columbia Treasury i.e., Columbia Treasury and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Columbia Treasury and Nasdaq-100(r)

Assuming the 90 days horizon Columbia Treasury is expected to generate 18.83 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Columbia Treasury Index is 5.82 times less risky than Nasdaq-100(r). It trades about 0.07 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  46,937  in Nasdaq 100 2x Strategy on May 5, 2025 and sell it today you would earn a total of  12,946  from holding Nasdaq 100 2x Strategy or generate 27.58% return on investment over 90 days.

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

Columbia Treasury Index  vs.  Nasdaq 100 2x Strategy

Columbia Treasury Index

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Treasury Index are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nasdaq 100 2x

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nasdaq-100(r) showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Treasury and Nasdaq-100(r)

The main advantage of trading using opposite Columbia Treasury and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Treasury position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Columbia Treasury Index and Nasdaq 100 2x Strategy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.