Correlation Between Columbia Seligman and BlackRock Utility

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

Diversification Opportunities for Columbia Seligman and BlackRock Utility

0.56

Correlation Coefficient

Columbia Seligman  BlackRock Utility

Very weak diversification

The 3 months correlation between Columbia and BlackRock is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and BlackRock Utility Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Utility 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 Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Utility has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and BlackRock Utility go up and down completely randomly.

Pair Corralation between Columbia Seligman and BlackRock Utility

Considering the 90-day investment horizon Columbia Seligman Premium is expected to under-perform the BlackRock Utility. In addition to that, Columbia Seligman is 1.47 times more volatile than BlackRock Utility Infrastructure. It trades about -0.13 of its total potential returns per unit of risk. BlackRock Utility Infrastructure is currently generating about 0.0 per unit of volatility. If you would invest  2,260  in BlackRock Utility Infrastructure on December 30, 2024 and sell it today you would lose (7.00) from holding BlackRock Utility Infrastructure or give up 0.31% of portfolio value over 90 days.

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

Columbia Seligman Premium  vs.  BlackRock Utility Infrastructu

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 Utility

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Utility Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BlackRock Utility is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Columbia Seligman and BlackRock Utility

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

The idea behind Columbia Seligman Premium and BlackRock Utility Infrastructure 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.