Correlation Between Columbia Sportswear and ITALIAN WINE
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and ITALIAN WINE 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 ITALIAN WINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and ITALIAN WINE BRANDS, you can compare the effects of market volatilities on Columbia Sportswear and ITALIAN WINE 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 ITALIAN WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and ITALIAN WINE.
Diversification Opportunities for Columbia Sportswear and ITALIAN WINE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Columbia and ITALIAN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and ITALIAN WINE BRANDS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITALIAN WINE BRANDS 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 ITALIAN WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITALIAN WINE BRANDS has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and ITALIAN WINE go up and down completely randomly.
Pair Corralation between Columbia Sportswear and ITALIAN WINE
Assuming the 90 days horizon Columbia Sportswear is expected to generate 0.92 times more return on investment than ITALIAN WINE. However, Columbia Sportswear is 1.08 times less risky than ITALIAN WINE. It trades about 0.03 of its potential returns per unit of risk. ITALIAN WINE BRANDS is currently generating about 0.01 per unit of risk. If you would invest 7,123 in Columbia Sportswear on August 31, 2024 and sell it today you would earn a total of 1,077 from holding Columbia Sportswear or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Sportswear vs. ITALIAN WINE BRANDS
Performance |
| Timeline |
| Columbia Sportswear |
| ITALIAN WINE BRANDS |
Columbia Sportswear and ITALIAN WINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and ITALIAN WINE
The main advantage of trading using opposite Columbia Sportswear and ITALIAN WINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, ITALIAN WINE 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 ITALIAN WINE will offset losses from the drop in ITALIAN WINE's long position.| Columbia Sportswear vs. Ralph Lauren | Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. NMI Holdings | Columbia Sportswear vs. Origin Agritech |
| ITALIAN WINE vs. SPORT LISBOA E | ITALIAN WINE vs. Big 5 Sporting | ITALIAN WINE vs. DICKS Sporting Goods | ITALIAN WINE vs. Columbia Sportswear |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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