Correlation Between BlackRock Health and Columbia Seligman

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

By analyzing existing cross correlation between BlackRock Health Sciences and Columbia Seligman Premium, you can compare the effects of market volatilities on BlackRock Health and Columbia Seligman 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 BlackRock Health with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Health and Columbia Seligman.

Diversification Opportunities for BlackRock Health and Columbia Seligman

-0.48

Correlation Coefficient

BlackRock Health  Columbia Seligman

Very good diversification

The 3 months correlation between BlackRock and Columbia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and Columbia Seligman Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Premium and BlackRock Health 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 BlackRock Health Sciences are associated (or correlated) with Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Premium has no effect on the direction of BlackRock Health i.e., BlackRock Health and Columbia Seligman go up and down completely randomly.

Pair Corralation between BlackRock Health and Columbia Seligman

Considering the 90-day investment horizon BlackRock Health Sciences is expected to under-perform the Columbia Seligman. But the etf apears to be less risky and, when comparing its historical volatility, BlackRock Health Sciences is 1.25 times less risky than Columbia Seligman. The etf trades about -0.1 of its potential returns per unit of risk. The Columbia Seligman Premium is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,158  in Columbia Seligman Premium on August 31, 2024 and sell it today you would earn a total of  234.00  from holding Columbia Seligman Premium or generate 7.41% return on investment over 90 days.

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

BlackRock Health Sciences  vs.  Columbia Seligman Premium

BlackRock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Columbia Seligman Premium

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Premium are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Columbia Seligman may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BlackRock Health and Columbia Seligman

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

The idea behind BlackRock Health Sciences and Columbia Seligman Premium 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 Stocks Directory module to find actively traded stocks across global markets.