Correlation Between Columbia Seligman and Columbia

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

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

Diversification Opportunities for Columbia Seligman and Columbia

-0.75

Correlation Coefficient

Columbia Seligman  Columbia

Pay attention - limited upside

The 3 months correlation between Columbia and Columbia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Global and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government and Columbia Seligman 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 Seligman Global are associated (or correlated) with Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Government has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Columbia go up and down completely randomly.

Pair Corralation between Columbia Seligman and Columbia

Assuming the 90 days horizon Columbia Seligman Global is expected to generate 2.63 times more return on investment than Columbia. However, Columbia Seligman is 2.63 times more volatile than Columbia Government Mortgage. It trades about 0.22 of its potential returns per unit of risk. Columbia Government Mortgage is currently generating about -0.13 per unit of risk. If you would invest  7,547  in Columbia Seligman Global on September 5, 2024 and sell it today you would earn a total of  1,183  from holding Columbia Seligman Global or generate 15.68% return on investment over 90 days.

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

Columbia Seligman Global  vs.  Columbia Government Mortgage

Columbia Seligman Global

Risk-Adjusted Performance

17 of 100

Solid

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

Columbia Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Government Mortgage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Seligman and Columbia

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

The idea behind Columbia Seligman Global and Columbia Government Mortgage 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.