Correlation Between Visa and Columbia Sportswear
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Columbia Sportswear, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Columbia Sportswear.
Diversification Opportunities for Visa and Columbia Sportswear
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Columbia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and Visa 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 Visa Class A 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 Visa i.e., Visa and Columbia Sportswear go up and down completely randomly.
Pair Corralation between Visa and Columbia Sportswear
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.74 times more return on investment than Columbia Sportswear. However, Visa Class A is 1.36 times less risky than Columbia Sportswear. It trades about 0.44 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.29 per unit of risk. If you would invest 31,604 in Visa Class A on November 1, 2024 and sell it today you would earn a total of 2,701 from holding Visa Class A or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Columbia Sportswear
Performance |
| Timeline |
| Visa Class A |
| Columbia Sportswear |
Visa and Columbia Sportswear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Columbia Sportswear
The main advantage of trading using opposite Visa and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Columbia Sportswear vs. Vince Holding Corp | Columbia Sportswear vs. Ermenegildo Zegna NV | Columbia Sportswear vs. Gildan Activewear | Columbia Sportswear vs. G III Apparel Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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