Correlation Between COLUMBIA SPORTSWEAR and DICKS Sporting
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and DICKS Sporting 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 DICKS Sporting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and DICKS Sporting Goods, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and DICKS Sporting 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 DICKS Sporting. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and DICKS Sporting.
Diversification Opportunities for COLUMBIA SPORTSWEAR and DICKS Sporting
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COLUMBIA and DICKS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and DICKS Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods 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 DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and DICKS Sporting go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and DICKS Sporting
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 7.05 times less return on investment than DICKS Sporting. But when comparing it to its historical volatility, COLUMBIA SPORTSWEAR is 1.95 times less risky than DICKS Sporting. It trades about 0.01 of its potential returns per unit of risk. DICKS Sporting Goods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,139 in DICKS Sporting Goods on August 25, 2024 and sell it today you would earn a total of 917.00 from holding DICKS Sporting Goods or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. DICKS Sporting Goods
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| DICKS Sporting Goods |
COLUMBIA SPORTSWEAR and DICKS Sporting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and DICKS Sporting
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and DICKS Sporting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, DICKS Sporting 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 DICKS Sporting will offset losses from the drop in DICKS Sporting's long position.The idea behind COLUMBIA SPORTSWEAR and DICKS Sporting Goods 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.
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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