Correlation Between Columbia Seligman and Oil Gas
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and Oil Gas 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 Oil Gas 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 Oil Gas Ultrasector, you can compare the effects of market volatilities on Columbia Seligman and Oil Gas 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 Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Oil Gas.
Diversification Opportunities for Columbia Seligman and Oil Gas
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Oil is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Global and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector 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 Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Oil Gas go up and down completely randomly.
Pair Corralation between Columbia Seligman and Oil Gas
Assuming the 90 days horizon Columbia Seligman is expected to generate 2.32 times less return on investment than Oil Gas. But when comparing it to its historical volatility, Columbia Seligman Global is 1.52 times less risky than Oil Gas. It trades about 0.2 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,567 in Oil Gas Ultrasector on August 31, 2024 and sell it today you would earn a total of 421.00 from holding Oil Gas Ultrasector or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Seligman Global vs. Oil Gas Ultrasector
Performance |
| Timeline |
| Columbia Seligman Global |
| Oil Gas Ultrasector |
Columbia Seligman and Oil Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Seligman and Oil Gas
The main advantage of trading using opposite Columbia Seligman and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, Oil Gas 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 Oil Gas will offset losses from the drop in Oil Gas' long position.| Columbia Seligman vs. Nasdaq 100 Index Fund | Columbia Seligman vs. T Rowe Price | Columbia Seligman vs. Eic Value Fund | Columbia Seligman vs. Vanguard Small Cap Growth |
| Oil Gas vs. Oil Gas Ultrasector | Oil Gas vs. Ultramid Cap Profund Ultramid Cap | Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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