Correlation Between Health Care and Columbia Seligman

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

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

Diversification Opportunities for Health Care and Columbia Seligman

0.0

Correlation Coefficient

Health Care  Columbia Seligman

Pay attention - limited upside

The 3 months correlation between Health and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Portfolio 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 Health Care 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 Health Care Portfolio 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 Health Care i.e., Health Care and Columbia Seligman go up and down completely randomly.

Pair Corralation between Health Care and Columbia Seligman

If you would invest  2,757  in Health Care Portfolio on December 27, 2024 and sell it today you would earn a total of  16.00  from holding Health Care Portfolio or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Health Care Portfolio  vs.  Columbia Seligman Global

Health Care Portfolio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Portfolio are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Health Care is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 fairly strong basic indicators, Columbia Seligman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Health Care and Columbia Seligman

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

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..