Correlation Between Eagle Materials and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and COLUMBIA SPORTSWEAR 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 Eagle Materials and COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Eagle Materials and COLUMBIA SPORTSWEAR 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 Eagle Materials with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Eagle Materials and COLUMBIA SPORTSWEAR
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and COLUMBIA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and Eagle Materials 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 Eagle Materials are associated (or correlated) with COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Eagle Materials i.e., Eagle Materials and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Eagle Materials and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon Eagle Materials is expected to generate 1.96 times less return on investment than COLUMBIA SPORTSWEAR. But when comparing it to its historical volatility, Eagle Materials is 1.04 times less risky than COLUMBIA SPORTSWEAR. It trades about 0.21 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 6,973 in COLUMBIA SPORTSWEAR on August 31, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Eagle Materials |
| COLUMBIA SPORTSWEAR |
Eagle Materials and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Eagle Materials and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
| COLUMBIA SPORTSWEAR vs. SIVERS SEMICONDUCTORS AB | COLUMBIA SPORTSWEAR vs. Darden Restaurants | COLUMBIA SPORTSWEAR vs. Reliance Steel Aluminum | COLUMBIA SPORTSWEAR vs. Q2M Managementberatung AG |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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