Correlation Between Columbia Seligman and Sentinel Common

Can any of the company-specific risk be diversified away by investing in both Columbia Seligman and Sentinel Common 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 Sentinel Common 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 Sentinel Mon Stock, you can compare the effects of market volatilities on Columbia Seligman and Sentinel Common 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 Sentinel Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and Sentinel Common.

Diversification Opportunities for Columbia Seligman and Sentinel Common

0.85

Correlation Coefficient

Columbia Seligman  Sentinel Common

Very poor diversification

The 3 months correlation between Columbia and Sentinel is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Munications and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock 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 Sentinel Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Sentinel Common go up and down completely randomly.

Pair Corralation between Columbia Seligman and Sentinel Common

Assuming the 90 days horizon Columbia Seligman Munications is expected to generate 1.55 times more return on investment than Sentinel Common. However, Columbia Seligman is 1.55 times more volatile than Sentinel Mon Stock. It trades about 0.19 of its potential returns per unit of risk. Sentinel Mon Stock is currently generating about 0.18 per unit of risk. If you would invest  11,859  in Columbia Seligman Munications on September 2, 2024 and sell it today you would earn a total of  1,489  from holding Columbia Seligman Munications or generate 12.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.31%
Values	Daily Returns

Columbia Seligman Munications  vs.  Sentinel Mon Stock

Columbia Seligman

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Munications are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Seligman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sentinel Mon Stock

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sentinel Mon Stock are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Sentinel Common may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Seligman and Sentinel Common

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

The idea behind Columbia Seligman Munications and Sentinel Mon Stock 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.