Correlation Between Gmo High and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both Gmo High 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 Gmo High and Columbia Seligman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Columbia Seligman Munications, you can compare the effects of market volatilities on Gmo High 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 Gmo High with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Columbia Seligman.
Diversification Opportunities for Gmo High and Columbia Seligman
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GMO and Columbia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Columbia Seligman Munications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman and Gmo High 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 Gmo High Yield 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 has no effect on the direction of Gmo High i.e., Gmo High and Columbia Seligman go up and down completely randomly.
Pair Corralation between Gmo High and Columbia Seligman
Assuming the 90 days horizon Gmo High is expected to generate 5.97 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, Gmo High Yield is 5.02 times less risky than Columbia Seligman. It trades about 0.36 of its potential returns per unit of risk. Columbia Seligman Munications is currently generating about 0.42 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Columbia Seligman Munications
Performance |
| Timeline |
| Gmo High Yield |
| Columbia Seligman |
Gmo High and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Columbia Seligman
The main advantage of trading using opposite Gmo High and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High 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.| Gmo High vs. Vanguard High Yield Corporate | Gmo High vs. Vanguard High Yield Porate | Gmo High vs. Blackrock Hi Yld | Gmo High vs. Blackrock High Yield |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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