Correlation Between Aberdeen and Columbia Seligman

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

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

Diversification Opportunities for Aberdeen and Columbia Seligman

-0.43

Correlation Coefficient

Aberdeen  Columbia Seligman

Very good diversification

The 3 months correlation between Aberdeen and Columbia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Eq Long Short 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 Aberdeen 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 Aberdeen Eq Long Short 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 Aberdeen i.e., Aberdeen and Columbia Seligman go up and down completely randomly.

Pair Corralation between Aberdeen and Columbia Seligman

Assuming the 90 days horizon Aberdeen Eq Long Short is expected to generate 25.9 times more return on investment than Columbia Seligman. However, Aberdeen is 25.9 times more volatile than Columbia Seligman Premium. It trades about 0.18 of its potential returns per unit of risk. Columbia Seligman Premium is currently generating about -0.13 per unit of risk. If you would invest  907.00  in Aberdeen Eq Long Short on December 30, 2024 and sell it today you would earn a total of  2,047  from holding Aberdeen Eq Long Short or generate 225.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	56.45%
Values	Daily Returns

Aberdeen Eq Long Short  vs.  Columbia Seligman Premium

Aberdeen Eq Long

Risk-Adjusted Performance

Good

Over the last 90 days Aberdeen Eq Long Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak forward indicators, Aberdeen showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Seligman Premium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Seligman Premium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Aberdeen and Columbia Seligman

The main advantage of trading using opposite Aberdeen and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen 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 Aberdeen Eq Long Short 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.