Correlation Between COLUMBIA SPORTSWEAR and Sims Metal
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Sims Metal 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 Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Sims Metal Management, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Sims Metal.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Sims Metal
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between COLUMBIA and Sims is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Sims Metal go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Sims Metal
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.88 times more return on investment than Sims Metal. However, COLUMBIA SPORTSWEAR is 1.14 times less risky than Sims Metal. It trades about 0.39 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.15 per unit of risk. If you would invest 6,973 in COLUMBIA SPORTSWEAR on September 1, 2024 and sell it today you would earn a total of 1,327 from holding COLUMBIA SPORTSWEAR or generate 19.03% 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. Sims Metal Management
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Sims Metal Management |
COLUMBIA SPORTSWEAR and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Sims Metal
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| COLUMBIA SPORTSWEAR vs. SIVERS SEMICONDUCTORS AB | COLUMBIA SPORTSWEAR vs. Darden Restaurants | COLUMBIA SPORTSWEAR vs. Reliance Steel Aluminum | COLUMBIA SPORTSWEAR vs. Q2M Managementberatung AG |
| Sims Metal vs. Guidewire Software | Sims Metal vs. GREENX METALS LTD | Sims Metal vs. HK Electric Investments | Sims Metal vs. SEI INVESTMENTS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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