Correlation Between Columbia Treasury and Cornerstone Strategic

Can any of the company-specific risk be diversified away by investing in both Columbia Treasury and Cornerstone Strategic 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 Cornerstone Strategic 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 Cornerstone Strategic Value, you can compare the effects of market volatilities on Columbia Treasury and Cornerstone Strategic 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 Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Treasury and Cornerstone Strategic.

Diversification Opportunities for Columbia Treasury and Cornerstone Strategic

-0.81

Correlation Coefficient

Columbia Treasury  Cornerstone Strategic

Pay attention - limited upside

The 3 months correlation between Columbia and Cornerstone is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Treasury Index and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Columbia Treasury i.e., Columbia Treasury and Cornerstone Strategic go up and down completely randomly.

Pair Corralation between Columbia Treasury and Cornerstone Strategic

Assuming the 90 days horizon Columbia Treasury Index is expected to under-perform the Cornerstone Strategic. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Treasury Index is 2.6 times less risky than Cornerstone Strategic. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Cornerstone Strategic Value is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  790.00  in Cornerstone Strategic Value on August 21, 2024 and sell it today you would earn a total of  80.00  from holding Cornerstone Strategic Value or generate 10.13% return on investment over 90 days.

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

Columbia Treasury Index  vs.  Cornerstone Strategic Value

Columbia Treasury Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Treasury Index has generated negative risk-adjusted returns adding no value to fund investors. 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.

Cornerstone Strategic

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Value are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak essential indicators, Cornerstone Strategic displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Treasury and Cornerstone Strategic

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

The idea behind Columbia Treasury Index and Cornerstone Strategic Value 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.