Correlation Between Columbia Seligman and Highland Opportunities

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

Diversification Opportunities for Columbia Seligman and Highland Opportunities

0.61

Correlation Coefficient

Columbia Seligman  Highland Opportunities

Poor diversification

The 3 months correlation between Columbia and Highland is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Seligman Premium and Highland Opportunities And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Opportunities 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 Highland Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Opportunities has no effect on the direction of Columbia Seligman i.e., Columbia Seligman and Highland Opportunities go up and down completely randomly.

Pair Corralation between Columbia Seligman and Highland Opportunities

Considering the 90-day investment horizon Columbia Seligman Premium is expected to under-perform the Highland Opportunities. But the etf apears to be less risky and, when comparing its historical volatility, Columbia Seligman Premium is 1.09 times less risky than Highland Opportunities. The etf trades about -0.13 of its potential returns per unit of risk. The Highland Opportunities And is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  510.00  in Highland Opportunities And on December 30, 2024 and sell it today you would lose (14.00) from holding Highland Opportunities And or give up 2.75% of portfolio value over 90 days.

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

Columbia Seligman Premium  vs.  Highland Opportunities And

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.

Highland Opportunities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highland Opportunities And has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Highland Opportunities is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Columbia Seligman and Highland Opportunities

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

The idea behind Columbia Seligman Premium and Highland Opportunities And 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.