Correlation Between Aberdeen Gbl and Columbia Seligman

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

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

Diversification Opportunities for Aberdeen Gbl and Columbia Seligman

0.82

Correlation Coefficient

Aberdeen Gbl  Columbia Seligman

Very poor diversification

The 3 months correlation between Aberdeen and Columbia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Gbl Eq and Columbia Seligman Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Premium and Aberdeen Gbl 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 Aberdeen Gbl Eq 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 Premium has no effect on the direction of Aberdeen Gbl i.e., Aberdeen Gbl and Columbia Seligman go up and down completely randomly.

Pair Corralation between Aberdeen Gbl and Columbia Seligman

Assuming the 90 days horizon Aberdeen Gbl is expected to generate 1.9 times less return on investment than Columbia Seligman. But when comparing it to its historical volatility, Aberdeen Gbl Eq is 1.32 times less risky than Columbia Seligman. It trades about 0.03 of its potential returns per unit of risk. Columbia Seligman Premium is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,097  in Columbia Seligman Premium on July 5, 2024 and sell it today you would earn a total of  175.00  from holding Columbia Seligman Premium or generate 5.65% return on investment over 90 days.

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

Aberdeen Gbl Eq  vs.  Columbia Seligman Premium

Aberdeen Gbl Eq

Risk-Adjusted Performance

0 of 100

Very Weak

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

Columbia Seligman Premium

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, Columbia Seligman is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aberdeen Gbl and Columbia Seligman

The main advantage of trading using opposite Aberdeen Gbl and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Gbl 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 Aberdeen Gbl Eq and Columbia Seligman Premium 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.