Correlation Between Columbia Seligman and Aberdeen China
Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and Aberdeen China 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 Aberdeen China 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 Aberdeen China Oppty, you can compare the effects of market volatilities on Columbia Seligman and Aberdeen China 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 Aberdeen China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Aberdeen China.
Diversification Opportunities for Columbia Seligman and Aberdeen China
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and Aberdeen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and Aberdeen China Oppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen China Oppty 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 Aberdeen China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen China Oppty has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Aberdeen China go up and down completely randomly.
Pair Corralation between Columbia Seligman and Aberdeen China
Considering the 90-day investment horizon Columbia Seligman Premium is expected to generate 0.9 times more return on investment than Aberdeen China. However, Columbia Seligman Premium is 1.11 times less risky than Aberdeen China. It trades about 0.08 of its potential returns per unit of risk. Aberdeen China Oppty is currently generating about -0.03 per unit of risk. If you would invest 2,354 in Columbia Seligman Premium on August 30, 2024 and sell it today you would earn a total of 1,038 from holding Columbia Seligman Premium or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Seligman Premium vs. Aberdeen China Oppty
Performance |
| Timeline |
| Columbia Seligman Premium |
| Aberdeen China Oppty |
Columbia Seligman and Aberdeen China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Seligman and Aberdeen China
The main advantage of trading using opposite Columbia Seligman and Aberdeen China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, Aberdeen China 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 Aberdeen China will offset losses from the drop in Aberdeen China'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 |
| Aberdeen China vs. Morgan Stanley Global | Aberdeen China vs. Wisdomtree Siegel Global | Aberdeen China vs. Power Global Tactical | Aberdeen China vs. Barings Global Floating |
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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