Correlation Between VivoPower International and Columbia Seligman

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

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

Diversification Opportunities for VivoPower International and Columbia Seligman

-0.43

Correlation Coefficient

VivoPower International  Columbia Seligman

Very good diversification

The 3 months correlation between VivoPower and Columbia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC 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 VivoPower International 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 VivoPower International PLC 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 VivoPower International i.e., VivoPower International and Columbia Seligman go up and down completely randomly.

Pair Corralation between VivoPower International and Columbia Seligman

Given the investment horizon of 90 days VivoPower International PLC is expected to generate 22.74 times more return on investment than Columbia Seligman. However, VivoPower International is 22.74 times more volatile than Columbia Seligman Global. It trades about 0.18 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  77.00  in VivoPower International PLC on September 10, 2024 and sell it today you would earn a total of  35.00  from holding VivoPower International PLC or generate 45.45% return on investment over 90 days.

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

VivoPower International PLC  vs.  Columbia Seligman Global

VivoPower International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VivoPower International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, VivoPower International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 VivoPower International and Columbia Seligman

The main advantage of trading using opposite VivoPower International and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VivoPower International 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 VivoPower International PLC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..