Correlation Between First Trust and Columbia Diversified

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

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

Diversification Opportunities for First Trust and Columbia Diversified

0.74

Correlation Coefficient

First Trust  Columbia Diversified

Poor diversification

The 3 months correlation between First and Columbia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Structured and Columbia Diversified Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Diversified and First Trust 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 First Trust Structured are associated (or correlated) with Columbia Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Diversified has no effect on the direction of First Trust i.e., First Trust and Columbia Diversified go up and down completely randomly.

Pair Corralation between First Trust and Columbia Diversified

Given the investment horizon of 90 days First Trust is expected to generate 1.72 times less return on investment than Columbia Diversified. In addition to that, First Trust is 1.26 times more volatile than Columbia Diversified Fixed. It trades about 0.12 of its total potential returns per unit of risk. Columbia Diversified Fixed is currently generating about 0.25 per unit of volatility. If you would invest  1,789  in Columbia Diversified Fixed on July 23, 2025 and sell it today you would earn a total of  66.00  from holding Columbia Diversified Fixed or generate 3.69% return on investment over 90 days.

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

First Trust Structured  vs.  Columbia Diversified Fixed

First Trust Structured

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Structured are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Columbia Diversified

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Diversified Fixed are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Columbia Diversified is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with First Trust and Columbia Diversified

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

The idea behind First Trust Structured and Columbia Diversified Fixed 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.