Correlation Between COLUMBIA SPORTSWEAR and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Aedas Homes 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 Aedas Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Aedas Homes SA, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Aedas Homes.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Aedas Homes
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COLUMBIA and Aedas is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Aedas Homes go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Aedas Homes
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 16.5 times less return on investment than Aedas Homes. But when comparing it to its historical volatility, COLUMBIA SPORTSWEAR is 1.28 times less risky than Aedas Homes. It trades about 0.01 of its potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Aedas Homes SA on October 28, 2024 and sell it today you would earn a total of 1,715 from holding Aedas Homes SA or generate 164.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. Aedas Homes SA
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Aedas Homes SA |
COLUMBIA SPORTSWEAR and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Aedas Homes
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc |
| Aedas Homes vs. Beta Systems Software | Aedas Homes vs. BANK OF CHINA | Aedas Homes vs. CullenFrost Bankers | Aedas Homes vs. Direct Line Insurance |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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