Correlation Between COLUMBIA SPORTSWEAR and ABB
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and ABB 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 ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and ABB, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and ABB.
Diversification Opportunities for COLUMBIA SPORTSWEAR and ABB
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COLUMBIA and ABB is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and ABB go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and ABB
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.63 times more return on investment than ABB. However, COLUMBIA SPORTSWEAR is 1.58 times less risky than ABB. It trades about 0.23 of its potential returns per unit of risk. ABB is currently generating about 0.09 per unit of risk. If you would invest 7,073 in COLUMBIA SPORTSWEAR on August 26, 2024 and sell it today you would earn a total of 627.00 from holding COLUMBIA SPORTSWEAR or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. ABB
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| ABB |
COLUMBIA SPORTSWEAR and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and ABB
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc |
| ABB vs. Big 5 Sporting | ABB vs. Gaztransport Technigaz SA | ABB vs. COLUMBIA SPORTSWEAR | ABB vs. Fukuyama Transporting Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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