Correlation Between White Oak and Columbia Seligman

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

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

Diversification Opportunities for White Oak and Columbia Seligman

0.48

Correlation Coefficient

White Oak  Columbia Seligman

Very weak diversification

The 3 months correlation between White and Columbia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding White Oak Select and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global and White Oak 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 White Oak Select are associated (or correlated) with Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of White Oak i.e., White Oak and Columbia Seligman go up and down completely randomly.

Pair Corralation between White Oak and Columbia Seligman

Assuming the 90 days horizon White Oak is expected to generate 1.54 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, White Oak Select is 1.35 times less risky than Columbia Seligman. It trades about 0.05 of its potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,308  in Columbia Seligman Global on October 4, 2024 and sell it today you would earn a total of  2,309  from holding Columbia Seligman Global or generate 43.5% return on investment over 90 days.

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

White Oak Select  vs.  Columbia Seligman Global

White Oak Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days White Oak Select has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Columbia Seligman Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Seligman Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia Seligman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with White Oak and Columbia Seligman

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

The idea behind White Oak Select and Columbia Seligman Global 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.