Correlation Between InPlay Oil and Columbia Sportswear

Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Columbia Sportswear into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InPlay Oil Corp and Columbia Sportswear, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Columbia Sportswear.

Diversification Opportunities for InPlay Oil and Columbia Sportswear

-0.78

Correlation Coefficient

InPlay Oil  Columbia Sportswear

Pay attention - limited upside

The 3 months correlation between InPlay and Columbia is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Columbia Sportswear go up and down completely randomly.

Pair Corralation between InPlay Oil and Columbia Sportswear

Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Columbia Sportswear. In addition to that, InPlay Oil is 1.07 times more volatile than Columbia Sportswear. It trades about -0.15 of its total potential returns per unit of risk. Columbia Sportswear is currently generating about 0.12 per unit of volatility. If you would invest  7,322  in Columbia Sportswear on September 22, 2024 and sell it today you would earn a total of  1,078  from holding Columbia Sportswear or generate 14.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

InPlay Oil Corp  vs.  Columbia Sportswear

InPlay Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Columbia Sportswear

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Columbia Sportswear reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InPlay Oil and Columbia Sportswear

The main advantage of trading using opposite InPlay Oil and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.

The idea behind InPlay Oil Corp and Columbia Sportswear pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.