Correlation Between COLUMBIA SPORTSWEAR and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Carnegie Clean 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 Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Carnegie Clean Energy, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Carnegie Clean.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Carnegie Clean
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between COLUMBIA and Carnegie is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Carnegie Clean go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Carnegie Clean
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.36 times more return on investment than Carnegie Clean. However, COLUMBIA SPORTSWEAR is 2.78 times less risky than Carnegie Clean. It trades about 0.0 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about -0.03 per unit of risk. If you would invest 8,300 in COLUMBIA SPORTSWEAR on September 29, 2024 and sell it today you would earn a total of 0.00 from holding COLUMBIA SPORTSWEAR or generate 0.0% 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. Carnegie Clean Energy
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Carnegie Clean Energy |
COLUMBIA SPORTSWEAR and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Carnegie Clean
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.The idea behind COLUMBIA SPORTSWEAR and Carnegie Clean Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Carnegie Clean vs. Orsted AS | Carnegie Clean vs. EDP Renovveis SA | Carnegie Clean vs. Huaneng Power International | Carnegie Clean vs. China Resources Power |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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