Correlation Between Versatile Bond and Columbia Seligman

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

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

Diversification Opportunities for Versatile Bond and Columbia Seligman

-0.22

Correlation Coefficient

Versatile Bond  Columbia Seligman

Very good diversification

The 3 months correlation between Versatile and Columbia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Versatile Bond Portfolio and Columbia Seligman Munications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman and Versatile Bond 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 Versatile Bond 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 has no effect on the direction of Versatile Bond i.e., Versatile Bond and Columbia Seligman go up and down completely randomly.

Pair Corralation between Versatile Bond and Columbia Seligman

Assuming the 90 days horizon Versatile Bond Portfolio is expected to generate 0.06 times more return on investment than Columbia Seligman. However, Versatile Bond Portfolio is 16.45 times less risky than Columbia Seligman. It trades about 0.18 of its potential returns per unit of risk. Columbia Seligman Munications is currently generating about -0.02 per unit of risk. If you would invest  6,130  in Versatile Bond Portfolio on December 4, 2024 and sell it today you would earn a total of  366.00  from holding Versatile Bond Portfolio or generate 5.97% return on investment over 90 days.

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

Versatile Bond Portfolio  vs.  Columbia Seligman Munications

Versatile Bond Portfolio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Versatile Bond Portfolio are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Versatile Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Seligman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Seligman Munications has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Versatile Bond and Columbia Seligman

The main advantage of trading using opposite Versatile Bond and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Versatile Bond 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 Versatile Bond Portfolio and Columbia Seligman Munications 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..