Correlation Between Lumia and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both Lumia 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 Lumia and Columbia Seligman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Columbia Seligman Global, you can compare the effects of market volatilities on Lumia 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 Lumia with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Columbia Seligman.
Diversification Opportunities for Lumia and Columbia Seligman
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Columbia is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lumia 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 Lumia 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 Lumia 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 Lumia i.e., Lumia and Columbia Seligman go up and down completely randomly.
Pair Corralation between Lumia and Columbia Seligman
Assuming the 90 days trading horizon Lumia is expected to under-perform the Columbia Seligman. In addition to that, Lumia is 3.44 times more volatile than Columbia Seligman Global. It trades about -0.33 of its total potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.09 per unit of volatility. If you would invest 7,703 in Columbia Seligman Global on November 2, 2024 and sell it today you would earn a total of 213.00 from holding Columbia Seligman Global or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lumia vs. Columbia Seligman Global
Performance |
| Timeline |
| Lumia |
| Columbia Seligman Global |
Lumia and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Columbia Seligman
The main advantage of trading using opposite Lumia and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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 Lumia 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.| Columbia Seligman vs. Columbia Seligman Global | Columbia Seligman vs. Columbia Seligman Global | Columbia Seligman vs. Columbia Seligman Global |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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