Correlation Between Columbia Sportswear and CSL
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and CSL 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 Sportswear and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and CSL Limited, you can compare the effects of market volatilities on Columbia Sportswear and CSL 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 Sportswear with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and CSL.
Diversification Opportunities for Columbia Sportswear and CSL
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and CSL is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Columbia Sportswear 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 Sportswear are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and CSL go up and down completely randomly.
Pair Corralation between Columbia Sportswear and CSL
Assuming the 90 days horizon Columbia Sportswear is expected to generate 1.54 times more return on investment than CSL. However, Columbia Sportswear is 1.54 times more volatile than CSL Limited. It trades about 0.05 of its potential returns per unit of risk. CSL Limited is currently generating about 0.0 per unit of risk. If you would invest 7,184 in Columbia Sportswear on August 29, 2024 and sell it today you would earn a total of 1,166 from holding Columbia Sportswear or generate 16.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Sportswear vs. CSL Limited
Performance |
| Timeline |
| Columbia Sportswear |
| CSL Limited |
Columbia Sportswear and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and CSL
The main advantage of trading using opposite Columbia Sportswear and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Columbia Sportswear vs. Lion One Metals | Columbia Sportswear vs. Addus HomeCare | Columbia Sportswear vs. American Homes 4 | Columbia Sportswear vs. ANGI Homeservices |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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