Correlation Between VHAI and Columbia Seligman

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

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

Diversification Opportunities for VHAI and Columbia Seligman

-0.69

Correlation Coefficient

VHAI  Columbia Seligman

Excellent diversification

The 3 months correlation between VHAI and Columbia is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global and VHAI 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 VHAI 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 Global has no effect on the direction of VHAI i.e., VHAI and Columbia Seligman go up and down completely randomly.

Pair Corralation between VHAI and Columbia Seligman

Given the investment horizon of 90 days VHAI is expected to generate 11.84 times more return on investment than Columbia Seligman. However, VHAI is 11.84 times more volatile than Columbia Seligman Global. It trades about 0.06 of its potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.31 per unit of risk. If you would invest  0.56  in VHAI on September 10, 2024 and sell it today you would earn a total of  0.01  from holding VHAI or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.0%
Values	Daily Returns

VHAI  vs.  Columbia Seligman Global

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Columbia Seligman Global

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Global are ranked lower than 21 (%) 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.

Pair Trading with VHAI and Columbia Seligman

The main advantage of trading using opposite VHAI and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI and Columbia Seligman Global 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.