Correlation Between Columbia Sportswear and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and Thyssenkrupp 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 Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and thyssenkrupp AG, you can compare the effects of market volatilities on Columbia Sportswear and Thyssenkrupp 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 Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Thyssenkrupp.
Diversification Opportunities for Columbia Sportswear and Thyssenkrupp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and Thyssenkrupp is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Thyssenkrupp go up and down completely randomly.
Pair Corralation between Columbia Sportswear and Thyssenkrupp
Assuming the 90 days horizon Columbia Sportswear is expected to generate 2.93 times less return on investment than Thyssenkrupp. But when comparing it to its historical volatility, Columbia Sportswear is 1.91 times less risky than Thyssenkrupp. It trades about 0.22 of its potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 333.00 in thyssenkrupp AG on September 12, 2024 and sell it today you would earn a total of 85.00 from holding thyssenkrupp AG or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Sportswear vs. thyssenkrupp AG
Performance |
| Timeline |
| Columbia Sportswear |
| thyssenkrupp AG |
Columbia Sportswear and Thyssenkrupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Sportswear and Thyssenkrupp
The main advantage of trading using opposite Columbia Sportswear and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.| Columbia Sportswear vs. Superior Plus Corp | Columbia Sportswear vs. SIVERS SEMICONDUCTORS AB | Columbia Sportswear vs. Norsk Hydro ASA | Columbia Sportswear vs. Reliance Steel Aluminum |
| Thyssenkrupp vs. Grupo Carso SAB | Thyssenkrupp vs. Big 5 Sporting | Thyssenkrupp vs. Columbia Sportswear | Thyssenkrupp vs. COMMERCIAL VEHICLE |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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