Correlation Between Columbia Seligman and First Trust
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and First Trust 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 First Trust 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 First Trust Capital, you can compare the effects of market volatilities on Columbia Seligman and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and First Trust.
Diversification Opportunities for Columbia Seligman and First Trust
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and First is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and First Trust Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Capital 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Capital has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and First Trust go up and down completely randomly.
Pair Corralation between Columbia Seligman and First Trust
Considering the 90-day investment horizon Columbia Seligman Premium is expected to generate 2.09 times more return on investment than First Trust. However, Columbia Seligman is 2.09 times more volatile than First Trust Capital. It trades about 0.08 of its potential returns per unit of risk. First Trust Capital is currently generating about 0.1 per unit of risk. If you would invest 2,106 in Columbia Seligman Premium on November 1, 2024 and sell it today you would earn a total of 1,162 from holding Columbia Seligman Premium or generate 55.18% 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. First Trust Capital
Performance |
| Timeline |
| Columbia Seligman Premium |
| First Trust Capital |
Columbia Seligman and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Seligman and First Trust
The main advantage of trading using opposite Columbia Seligman and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. First Trust Rising | First Trust vs. First Trust Value | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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