Correlation Between Columbia Seligman and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and Federated Pennsylvania 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 Federated Pennsylvania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Seligman Munications and Federated Pennsylvania Municipal, you can compare the effects of market volatilities on Columbia Seligman and Federated Pennsylvania 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 Federated Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Federated Pennsylvania.
Diversification Opportunities for Columbia Seligman and Federated Pennsylvania
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and FEDERATED is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Munications and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Munications are associated (or correlated) with Federated Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Columbia Seligman and Federated Pennsylvania
Assuming the 90 days horizon Columbia Seligman Munications is expected to generate 3.2 times more return on investment than Federated Pennsylvania. However, Columbia Seligman is 3.2 times more volatile than Federated Pennsylvania Municipal. It trades about 0.42 of its potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.17 per unit of risk. If you would invest 15,267 in Columbia Seligman Munications on September 3, 2024 and sell it today you would earn a total of 1,254 from holding Columbia Seligman Munications or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Seligman Munications vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Columbia Seligman |
| Federated Pennsylvania |
Columbia Seligman and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Seligman and Federated Pennsylvania
The main advantage of trading using opposite Columbia Seligman and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, Federated Pennsylvania 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 Federated Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.| Columbia Seligman vs. Federated Pennsylvania Municipal | Columbia Seligman vs. Versatile Bond Portfolio | Columbia Seligman vs. Gmo High Yield | Columbia Seligman vs. Lind Capital Partners |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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