Correlation Between COLUMBIA SPORTSWEAR and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Vulcan Materials 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 Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Vulcan Materials, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Vulcan Materials 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 Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Vulcan Materials.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Vulcan Materials
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COLUMBIA and Vulcan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Vulcan Materials go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Vulcan Materials
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.52 times more return on investment than Vulcan Materials. However, COLUMBIA SPORTSWEAR is 1.91 times less risky than Vulcan Materials. It trades about -0.52 of its potential returns per unit of risk. Vulcan Materials is currently generating about -0.32 per unit of risk. If you would invest 8,550 in COLUMBIA SPORTSWEAR on October 11, 2024 and sell it today you would lose (550.00) from holding COLUMBIA SPORTSWEAR or give up 6.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. Vulcan Materials
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Vulcan Materials |
COLUMBIA SPORTSWEAR and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Vulcan Materials
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| COLUMBIA SPORTSWEAR vs. SPARTAN STORES | COLUMBIA SPORTSWEAR vs. QUEEN S ROAD | COLUMBIA SPORTSWEAR vs. Burlington Stores | COLUMBIA SPORTSWEAR vs. COSTCO WHOLESALE CDR |
| Vulcan Materials vs. TITANIUM TRANSPORTGROUP | Vulcan Materials vs. Yuexiu Transport Infrastructure | Vulcan Materials vs. AEGEAN AIRLINES | Vulcan Materials vs. COLUMBIA SPORTSWEAR |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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