Correlation Between Big 5 and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Big 5 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 Big 5 and COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Big 5 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 Big 5 with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Big 5 and COLUMBIA SPORTSWEAR
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Big and COLUMBIA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and Big 5 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 Big 5 Sporting 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 Big 5 i.e., Big 5 and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Big 5 and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the COLUMBIA SPORTSWEAR. In addition to that, Big 5 is 2.88 times more volatile than COLUMBIA SPORTSWEAR. It trades about -0.07 of its total potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.0 per unit of volatility. If you would invest 8,182 in COLUMBIA SPORTSWEAR on August 26, 2024 and sell it today you would lose (482.00) from holding COLUMBIA SPORTSWEAR or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Big 5 Sporting |
| COLUMBIA SPORTSWEAR |
Big 5 and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Big 5 and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 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.The idea behind Big 5 Sporting and COLUMBIA SPORTSWEAR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |