Correlation Between Columbia Seligman and BlackRock Limited

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

By analyzing existing cross correlation between Columbia Seligman Premium and BlackRock Limited Duration, you can compare the effects of market volatilities on Columbia Seligman and BlackRock Limited 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 BlackRock Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Seligman and BlackRock Limited.

Diversification Opportunities for Columbia Seligman and BlackRock Limited

-0.03

Correlation Coefficient

Columbia Seligman  BlackRock Limited

Good diversification

The 3 months correlation between Columbia and BlackRock is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and BlackRock Limited Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Limited 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 Premium are associated (or correlated) with BlackRock Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Limited has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and BlackRock Limited go up and down completely randomly.

Pair Corralation between Columbia Seligman and BlackRock Limited

Considering the 90-day investment horizon Columbia Seligman Premium is expected to under-perform the BlackRock Limited. In addition to that, Columbia Seligman is 3.16 times more volatile than BlackRock Limited Duration. It trades about -0.13 of its total potential returns per unit of risk. BlackRock Limited Duration is currently generating about 0.07 per unit of volatility. If you would invest  1,374  in BlackRock Limited Duration on December 30, 2024 and sell it today you would earn a total of  23.00  from holding BlackRock Limited Duration or generate 1.67% return on investment over 90 days.

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

Columbia Seligman Premium  vs.  BlackRock Limited Duration

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 uncertain 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.

BlackRock Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Limited Duration are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, BlackRock Limited is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Columbia Seligman and BlackRock Limited

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

The idea behind Columbia Seligman Premium and BlackRock Limited Duration 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.