Correlation Between Columbia Seligman and Boston Partners

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

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

Diversification Opportunities for Columbia Seligman and Boston Partners

0.93

Correlation Coefficient

Columbia Seligman  Boston Partners

Almost no diversification

The 3 months correlation between Columbia and Boston is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Munications and Boston Partners Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners Small and Columbia Seligman 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 Columbia Seligman Munications are associated (or correlated) with Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners Small has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Boston Partners go up and down completely randomly.

Pair Corralation between Columbia Seligman and Boston Partners

Assuming the 90 days horizon Columbia Seligman Munications is expected to generate 0.88 times more return on investment than Boston Partners. However, Columbia Seligman Munications is 1.14 times less risky than Boston Partners. It trades about 0.22 of its potential returns per unit of risk. Boston Partners Small is currently generating about 0.16 per unit of risk. If you would invest  5,457  in Columbia Seligman Munications on September 4, 2024 and sell it today you would earn a total of  851.00  from holding Columbia Seligman Munications or generate 15.59% return on investment over 90 days.

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

Columbia Seligman Munications  vs.  Boston Partners Small

Columbia Seligman

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Munications are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Seligman showed solid returns over the last few months and may actually be approaching a breakup point.

Boston Partners Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Partners Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Boston Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Seligman and Boston Partners

The main advantage of trading using opposite Columbia Seligman and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Seligman position performs unexpectedly, Boston Partners 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 Boston Partners will offset losses from the drop in Boston Partners' long position.

The idea behind Columbia Seligman Munications and Boston Partners Small 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.