Correlation Between Columbia Sportswear and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and SMA Solar Technology, you can compare the effects of market volatilities on Columbia Sportswear and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and SMA Solar.
Diversification Opportunities for Columbia Sportswear and SMA Solar
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Columbia and SMA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and SMA Solar go up and down completely randomly.
Pair Corralation between Columbia Sportswear and SMA Solar
Assuming the 90 days horizon Columbia Sportswear is expected to generate 0.38 times more return on investment than SMA Solar. However, Columbia Sportswear is 2.64 times less risky than SMA Solar. It trades about 0.28 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.09 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Sportswear vs. SMA Solar Technology
Performance |
| Timeline |
| Columbia Sportswear |
| SMA Solar Technology |
Columbia Sportswear and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and SMA Solar
The main advantage of trading using opposite Columbia Sportswear and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Columbia Sportswear vs. Ralph Lauren | Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. NMI Holdings | Columbia Sportswear vs. Origin Agritech |
| SMA Solar vs. Ming Le Sports | SMA Solar vs. Columbia Sportswear | SMA Solar vs. CVW CLEANTECH INC | SMA Solar vs. CHINA TONTINE WINES |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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