Correlation Between Air Transport and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Air Transport and COLUMBIA SPORTSWEAR 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 Air Transport and COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Air Transport and COLUMBIA SPORTSWEAR 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 Air Transport with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Air Transport and COLUMBIA SPORTSWEAR
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and COLUMBIA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and Air Transport 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 Air Transport Services are associated (or correlated) with COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Air Transport i.e., Air Transport and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Air Transport and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon Air Transport is expected to generate 1.16 times less return on investment than COLUMBIA SPORTSWEAR. But when comparing it to its historical volatility, Air Transport Services is 2.48 times less risky than COLUMBIA SPORTSWEAR. It trades about 0.19 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,770 in COLUMBIA SPORTSWEAR on October 20, 2024 and sell it today you would earn a total of 330.00 from holding COLUMBIA SPORTSWEAR or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Air Transport Services |
| COLUMBIA SPORTSWEAR |
Air Transport and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Air Transport and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport position performs unexpectedly, COLUMBIA SPORTSWEAR 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 SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| Air Transport vs. Semiconductor Manufacturing International | Air Transport vs. Tencent Music Entertainment | Air Transport vs. Townsquare Media | Air Transport vs. PENN Entertainment |
| COLUMBIA SPORTSWEAR vs. Check Point Software | COLUMBIA SPORTSWEAR vs. United Insurance Holdings | COLUMBIA SPORTSWEAR vs. Easy Software AG | COLUMBIA SPORTSWEAR vs. Direct Line Insurance |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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