Correlation Between Black Oak and Columbia Seligman

Can any of the company-specific risk be diversified away by investing in both Black Oak 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 Black Oak and Columbia Seligman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Oak Emerging and Columbia Seligman Global, you can compare the effects of market volatilities on Black Oak 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 Black Oak with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Oak and Columbia Seligman.

Diversification Opportunities for Black Oak and Columbia Seligman

0.79

Correlation Coefficient

Black Oak  Columbia Seligman

Poor diversification

The 3 months correlation between Black and Columbia is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging 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 Black Oak 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 Black Oak Emerging 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 Black Oak i.e., Black Oak and Columbia Seligman go up and down completely randomly.

Pair Corralation between Black Oak and Columbia Seligman

Assuming the 90 days horizon Black Oak Emerging is expected to under-perform the Columbia Seligman. In addition to that, Black Oak is 1.03 times more volatile than Columbia Seligman Global. It trades about -0.11 of its total potential returns per unit of risk. Columbia Seligman Global is currently generating about -0.1 per unit of volatility. If you would invest  7,766  in Columbia Seligman Global on December 22, 2024 and sell it today you would lose (795.00) from holding Columbia Seligman Global or give up 10.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Black Oak Emerging  vs.  Columbia Seligman Global

Black Oak Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Oak Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Columbia Seligman Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Seligman Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Black Oak and Columbia Seligman

The main advantage of trading using opposite Black Oak and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak 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 Black Oak Emerging 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.