Correlation Between Financial Industries and Columbia Treasury
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Columbia Treasury 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 Financial Industries and Columbia Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Columbia Treasury Index, you can compare the effects of market volatilities on Financial Industries and Columbia Treasury 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 Financial Industries with a short position of Columbia Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Columbia Treasury.
Diversification Opportunities for Financial Industries and Columbia Treasury
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Financial and Columbia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Columbia Treasury Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Treasury Index and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Columbia Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Treasury Index has no effect on the direction of Financial Industries i.e., Financial Industries and Columbia Treasury go up and down completely randomly.
Pair Corralation between Financial Industries and Columbia Treasury
Assuming the 90 days horizon Financial Industries Fund is expected to generate 4.87 times more return on investment than Columbia Treasury. However, Financial Industries is 4.87 times more volatile than Columbia Treasury Index. It trades about 0.17 of its potential returns per unit of risk. Columbia Treasury Index is currently generating about 0.0 per unit of risk. If you would invest 1,854 in Financial Industries Fund on September 4, 2025 and sell it today you would earn a total of 61.00 from holding Financial Industries Fund or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Columbia Treasury Index
Performance |
| Timeline |
| Financial Industries |
| Columbia Treasury Index |
Financial Industries and Columbia Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Columbia Treasury
The main advantage of trading using opposite Financial Industries and Columbia Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Columbia Treasury 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 Treasury will offset losses from the drop in Columbia Treasury's long position.| Financial Industries vs. Regional Bank Fund | Financial Industries vs. Regional Bank Fund | Financial Industries vs. Multimanager Lifestyle Moderate | Financial Industries vs. Multimanager Lifestyle Balanced |
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Check out your portfolio center.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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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