Correlation Between Columbia Seligman and Vulcan Value

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

By analyzing existing cross correlation between Columbia Seligman Premium and Vulcan Value Partners, you can compare the effects of market volatilities on Columbia Seligman and Vulcan Value 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 Vulcan Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Vulcan Value.

Diversification Opportunities for Columbia Seligman and Vulcan Value

-0.43

Correlation Coefficient

Columbia Seligman  Vulcan Value

Very good diversification

The 3 months correlation between Columbia and Vulcan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners 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 Premium are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Vulcan Value go up and down completely randomly.

Pair Corralation between Columbia Seligman and Vulcan Value

Considering the 90-day investment horizon Columbia Seligman Premium is expected to generate 1.25 times more return on investment than Vulcan Value. However, Columbia Seligman is 1.25 times more volatile than Vulcan Value Partners. It trades about 0.16 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about -0.3 per unit of risk. If you would invest  3,043  in Columbia Seligman Premium on September 23, 2024 and sell it today you would earn a total of  119.00  from holding Columbia Seligman Premium or generate 3.91% return on investment over 90 days.

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

Columbia Seligman Premium  vs.  Vulcan Value Partners

Columbia Seligman Premium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Premium are ranked lower than 8 (%) 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 January 2025.

Vulcan Value Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vulcan Value Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Columbia Seligman and Vulcan Value

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

The idea behind Columbia Seligman Premium and Vulcan Value Partners 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.