Correlation Between Columbia Sportswear and POLARX
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and POLARX 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 POLARX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and POLARX LTD, you can compare the effects of market volatilities on Columbia Sportswear and POLARX 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 POLARX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and POLARX.
Diversification Opportunities for Columbia Sportswear and POLARX
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Columbia and POLARX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and POLARX LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POLARX LTD 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 POLARX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POLARX LTD has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and POLARX go up and down completely randomly.
Pair Corralation between Columbia Sportswear and POLARX
Assuming the 90 days horizon Columbia Sportswear is expected to generate 149.72 times less return on investment than POLARX. But when comparing it to its historical volatility, Columbia Sportswear is 20.22 times less risky than POLARX. It trades about 0.01 of its potential returns per unit of risk. POLARX LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.25 in POLARX LTD on October 13, 2024 and sell it today you would lose (1.20) from holding POLARX LTD or give up 96.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Columbia Sportswear vs. POLARX LTD
Performance |
Timeline |
Columbia Sportswear |
POLARX LTD |
Columbia Sportswear and POLARX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Columbia Sportswear and POLARX
The main advantage of trading using opposite Columbia Sportswear and POLARX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, POLARX 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 POLARX will offset losses from the drop in POLARX's long position.Columbia Sportswear vs. Sims Metal Management | Columbia Sportswear vs. Endeavour Mining PLC | Columbia Sportswear vs. Perdoceo Education | Columbia Sportswear vs. United Breweries Co |
POLARX vs. GRUPO CARSO A1 | POLARX vs. Daito Trust Construction | POLARX vs. Tokyu Construction Co | POLARX vs. Cars Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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