Correlation Between Columbia Sportswear and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and Rheinmetall 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 Rheinmetall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and Rheinmetall AG, you can compare the effects of market volatilities on Columbia Sportswear and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Rheinmetall.
Diversification Opportunities for Columbia Sportswear and Rheinmetall
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Rheinmetall is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Rheinmetall go up and down completely randomly.
Pair Corralation between Columbia Sportswear and Rheinmetall
Assuming the 90 days horizon Columbia Sportswear is expected to generate 15.12 times less return on investment than Rheinmetall. But when comparing it to its historical volatility, Columbia Sportswear is 1.16 times less risky than Rheinmetall. It trades about 0.01 of its potential returns per unit of risk. Rheinmetall AG is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 21,607 in Rheinmetall AG on October 12, 2024 and sell it today you would earn a total of 43,233 from holding Rheinmetall AG or generate 200.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Sportswear vs. Rheinmetall AG
Performance |
| Timeline |
| Columbia Sportswear |
| Rheinmetall AG |
Columbia Sportswear and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and Rheinmetall
The main advantage of trading using opposite Columbia Sportswear and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall's long position.| Columbia Sportswear vs. Compagnie Plastic Omnium | Columbia Sportswear vs. ELECTRONIC ARTS | Columbia Sportswear vs. THRACE PLASTICS | Columbia Sportswear vs. AOI Electronics Co |
| Rheinmetall vs. Columbia Sportswear | Rheinmetall vs. G III Apparel Group | Rheinmetall vs. COLUMBIA SPORTSWEAR | Rheinmetall vs. ANTA SPORTS PRODUCT |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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