Correlation Between Nuveen Dow and Columbia Seligman

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

By analyzing existing cross correlation between Nuveen Dow 30Sm and Columbia Seligman Premium, you can compare the effects of market volatilities on Nuveen Dow 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 Nuveen Dow with a short position of Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Dow and Columbia Seligman.

Diversification Opportunities for Nuveen Dow and Columbia Seligman

0.75

Correlation Coefficient

Nuveen Dow  Columbia Seligman

Poor diversification

The 3 months correlation between Nuveen and Columbia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Dow 30Sm 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 Nuveen Dow 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 Nuveen Dow 30Sm 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 Nuveen Dow i.e., Nuveen Dow and Columbia Seligman go up and down completely randomly.

Pair Corralation between Nuveen Dow and Columbia Seligman

Given the investment horizon of 90 days Nuveen Dow is expected to generate 3.06 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, Nuveen Dow 30Sm is 1.46 times less risky than Columbia Seligman. It trades about 0.08 of its potential returns per unit of risk. Columbia Seligman Premium is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,952  in Columbia Seligman Premium on October 7, 2024 and sell it today you would earn a total of  305.00  from holding Columbia Seligman Premium or generate 10.33% return on investment over 90 days.

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

Nuveen Dow 30Sm  vs.  Columbia Seligman Premium

Nuveen Dow 30Sm

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dow 30Sm are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nuveen Dow is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Seligman Premium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Premium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Columbia Seligman may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuveen Dow and Columbia Seligman

The main advantage of trading using opposite Nuveen Dow and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Dow 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 Nuveen Dow 30Sm and Columbia Seligman Premium 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..