Correlation Between Columbia Sportswear and Metso Outotec
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and Metso Outotec 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 Metso Outotec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and Metso Outotec Oyj, you can compare the effects of market volatilities on Columbia Sportswear and Metso Outotec 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 Metso Outotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Metso Outotec.
Diversification Opportunities for Columbia Sportswear and Metso Outotec
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and Metso is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Metso Outotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metso Outotec Oyj 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 Metso Outotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metso Outotec Oyj has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Metso Outotec go up and down completely randomly.
Pair Corralation between Columbia Sportswear and Metso Outotec
Assuming the 90 days horizon Columbia Sportswear is expected to generate 1.09 times more return on investment than Metso Outotec. However, Columbia Sportswear is 1.09 times more volatile than Metso Outotec Oyj. It trades about 0.28 of its potential returns per unit of risk. Metso Outotec Oyj is currently generating about -0.11 per unit of risk. If you would invest 7,322 in Columbia Sportswear on September 2, 2024 and sell it today you would earn a total of 878.00 from holding Columbia Sportswear or generate 11.99% 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. Metso Outotec Oyj
Performance |
| Timeline |
| Columbia Sportswear |
| Metso Outotec Oyj |
Columbia Sportswear and Metso Outotec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and Metso Outotec
The main advantage of trading using opposite Columbia Sportswear and Metso Outotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, Metso Outotec 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 Metso Outotec will offset losses from the drop in Metso Outotec's long position.| Columbia Sportswear vs. Ralph Lauren | Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. NMI Holdings | Columbia Sportswear vs. Origin Agritech |
| Metso Outotec vs. SPORT LISBOA E | Metso Outotec vs. Columbia Sportswear | Metso Outotec vs. BII Railway Transportation | Metso Outotec vs. Sumitomo Mitsui Construction |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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