Correlation Between POLARX and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both POLARX 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 POLARX and Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between POLARX LTD and Columbia Sportswear, you can compare the effects of market volatilities on POLARX 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 POLARX with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of POLARX and Columbia Sportswear.
Diversification Opportunities for POLARX and Columbia Sportswear
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between POLARX and Columbia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding POLARX LTD and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and POLARX 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 POLARX LTD 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 POLARX i.e., POLARX and Columbia Sportswear go up and down completely randomly.
Pair Corralation between POLARX and Columbia Sportswear
Assuming the 90 days horizon POLARX LTD is expected to generate 20.22 times more return on investment than Columbia Sportswear. However, POLARX is 20.22 times more volatile than Columbia Sportswear. It trades about 0.07 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.01 per unit of risk. If you would invest 1.25 in POLARX LTD on October 13, 2024 and sell it today you would lose (1.20) from holding POLARX LTD or give up 96.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
POLARX LTD vs. Columbia Sportswear
Performance |
| Timeline |
| POLARX LTD |
| Columbia Sportswear |
POLARX and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with POLARX and Columbia Sportswear
The main advantage of trading using opposite POLARX and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POLARX 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.| POLARX vs. GRUPO CARSO A1 | POLARX vs. Daito Trust Construction | POLARX vs. Tokyu Construction Co | POLARX vs. Cars Inc |
| Columbia Sportswear vs. Sims Metal Management | Columbia Sportswear vs. Endeavour Mining PLC | Columbia Sportswear vs. Perdoceo Education | Columbia Sportswear vs. United Breweries Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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