Correlation Between Columbia Sportswear and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and Fevertree Drinks Plc, you can compare the effects of market volatilities on Columbia Sportswear and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Fevertree Drinks.
Diversification Opportunities for Columbia Sportswear and Fevertree Drinks
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Columbia and Fevertree is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Columbia Sportswear and Fevertree Drinks
Assuming the 90 days horizon Columbia Sportswear is expected to generate 0.79 times more return on investment than Fevertree Drinks. However, Columbia Sportswear is 1.26 times less risky than Fevertree Drinks. It trades about 0.04 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.06 per unit of risk. If you would invest 6,684 in Columbia Sportswear on September 12, 2024 and sell it today you would earn a total of 1,666 from holding Columbia Sportswear or generate 24.93% 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. Fevertree Drinks Plc
Performance |
| Timeline |
| Columbia Sportswear |
| Fevertree Drinks Plc |
Columbia Sportswear and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and Fevertree Drinks
The main advantage of trading using opposite Columbia Sportswear and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. SIVERS SEMICONDUCTORS AB | Columbia Sportswear vs. Norsk Hydro ASA | Columbia Sportswear vs. Reliance Steel Aluminum |
| Fevertree Drinks vs. X FAB Silicon Foundries | Fevertree Drinks vs. AIR PRODCHEMICALS | Fevertree Drinks vs. LG Display Co | Fevertree Drinks vs. Mitsubishi Gas Chemical |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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