Correlation Between ENN Energy and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both ENN Energy 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 ENN Energy and COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ENN Energy Holdings and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on ENN Energy 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 ENN Energy with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENN Energy and COLUMBIA SPORTSWEAR.
Diversification Opportunities for ENN Energy and COLUMBIA SPORTSWEAR
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ENN and COLUMBIA is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ENN Energy Holdings and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and ENN Energy 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 ENN Energy Holdings 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 ENN Energy i.e., ENN Energy and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between ENN Energy and COLUMBIA SPORTSWEAR
Assuming the 90 days trading horizon ENN Energy is expected to generate 2.65 times less return on investment than COLUMBIA SPORTSWEAR. In addition to that, ENN Energy is 1.63 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.06 of its total potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.27 per unit of volatility. If you would invest 7,770 in COLUMBIA SPORTSWEAR on September 12, 2024 and sell it today you would earn a total of 780.00 from holding COLUMBIA SPORTSWEAR or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ENN Energy Holdings vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| ENN Energy Holdings |
| COLUMBIA SPORTSWEAR |
ENN Energy and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ENN Energy and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite ENN Energy and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENN Energy 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.| ENN Energy vs. COLUMBIA SPORTSWEAR | ENN Energy vs. InPlay Oil Corp | ENN Energy vs. Universal Display | ENN Energy vs. JD SPORTS FASH |
| COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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