Correlation Between Columbia Seligman and Franklin Templeton
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and Franklin Templeton 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 Franklin Templeton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Seligman Premium and Franklin Templeton ETF, you can compare the effects of market volatilities on Columbia Seligman and Franklin Templeton 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 Franklin Templeton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Franklin Templeton.
Diversification Opportunities for Columbia Seligman and Franklin Templeton
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Columbia and Franklin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and Franklin Templeton ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Templeton ETF 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 Premium are associated (or correlated) with Franklin Templeton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Templeton ETF has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Franklin Templeton go up and down completely randomly.
Pair Corralation between Columbia Seligman and Franklin Templeton
Considering the 90-day investment horizon Columbia Seligman Premium is expected to generate 1.38 times more return on investment than Franklin Templeton. However, Columbia Seligman is 1.38 times more volatile than Franklin Templeton ETF. It trades about 0.07 of its potential returns per unit of risk. Franklin Templeton ETF is currently generating about 0.05 per unit of risk. If you would invest 2,176 in Columbia Seligman Premium on November 2, 2024 and sell it today you would earn a total of 1,092 from holding Columbia Seligman Premium or generate 50.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Seligman Premium vs. Franklin Templeton ETF
Performance |
| Timeline |
| Columbia Seligman Premium |
| Franklin Templeton ETF |
Columbia Seligman and Franklin Templeton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Seligman and Franklin Templeton
The main advantage of trading using opposite Columbia Seligman and Franklin Templeton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, Franklin Templeton 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 Franklin Templeton will offset losses from the drop in Franklin Templeton's long position.| Columbia Seligman vs. Eaton Vance Enhanced | Columbia Seligman vs. BlackRock Utility Infrastructure | Columbia Seligman vs. BlackRock Health Sciences | Columbia Seligman vs. BlackRock Science Tech |
| Franklin Templeton vs. Franklin Core Dividend | Franklin Templeton vs. Franklin International Core | Franklin Templeton vs. WisdomTree Trust | Franklin Templeton vs. First Trust Exchange Traded |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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