Correlation Between NYSE Composite and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Columbia Seligman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Columbia Seligman Premium, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Columbia Seligman.
Diversification Opportunities for NYSE Composite and Columbia Seligman
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Columbia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Columbia Seligman Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Premium and NYSE Composite 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 NYSE Composite 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 Premium has no effect on the direction of NYSE Composite i.e., NYSE Composite and Columbia Seligman go up and down completely randomly.
Pair Corralation between NYSE Composite and Columbia Seligman
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.21 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, NYSE Composite is 1.27 times less risky than Columbia Seligman. It trades about 0.19 of its potential returns per unit of risk. Columbia Seligman Premium is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,235 in Columbia Seligman Premium on August 25, 2024 and sell it today you would earn a total of 112.00 from holding Columbia Seligman Premium or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Columbia Seligman Premium
Performance |
| Timeline |
NYSE Composite and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Columbia Seligman Premium
Pair trading matchups for Columbia Seligman
Pair Trading with NYSE Composite and Columbia Seligman
The main advantage of trading using opposite NYSE Composite and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Columbia Seligman vs. Eaton Vance Enhanced | Columbia Seligman vs. BlackRock Utility Infrastructure | Columbia Seligman vs. BlackRock Health Sciences | Columbia Seligman vs. BlackRock Science Tech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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