Correlation Between Columbia Sportswear and STMICROELECTRONICS
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and STMICROELECTRONICS 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 STMICROELECTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and STMICROELECTRONICS, you can compare the effects of market volatilities on Columbia Sportswear and STMICROELECTRONICS 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 STMICROELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and STMICROELECTRONICS.
Diversification Opportunities for Columbia Sportswear and STMICROELECTRONICS
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Columbia and STMICROELECTRONICS is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and STMICROELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMICROELECTRONICS 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 STMICROELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMICROELECTRONICS has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and STMICROELECTRONICS go up and down completely randomly.
Pair Corralation between Columbia Sportswear and STMICROELECTRONICS
Assuming the 90 days horizon Columbia Sportswear is expected to generate 0.73 times more return on investment than STMICROELECTRONICS. However, Columbia Sportswear is 1.37 times less risky than STMICROELECTRONICS. It trades about 0.05 of its potential returns per unit of risk. STMICROELECTRONICS is currently generating about -0.08 per unit of risk. If you would invest 7,263 in Columbia Sportswear on December 4, 2024 and sell it today you would earn a total of 1,337 from holding Columbia Sportswear or generate 18.41% 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. STMICROELECTRONICS
Performance |
| Timeline |
| Columbia Sportswear |
| STMICROELECTRONICS |
Columbia Sportswear and STMICROELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and STMICROELECTRONICS
The main advantage of trading using opposite Columbia Sportswear and STMICROELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, STMICROELECTRONICS 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 STMICROELECTRONICS will offset losses from the drop in STMICROELECTRONICS's long position.| Columbia Sportswear vs. BROADPEAK SA EO | Columbia Sportswear vs. CAIRN HOMES EO | Columbia Sportswear vs. CITY OFFICE REIT | Columbia Sportswear vs. Gold Road Resources |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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