Correlation Between COLUMBIA SPORTSWEAR and OtelloASA

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

By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Otello ASA, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and OtelloASA 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 COLUMBIA SPORTSWEAR with a short position of OtelloASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and OtelloASA.

Diversification Opportunities for COLUMBIA SPORTSWEAR and OtelloASA

-0.23

Correlation Coefficient

COLUMBIA SPORTSWEAR  OtelloASA

Very good diversification

The 3 months correlation between COLUMBIA and OtelloASA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Otello ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otello ASA and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR are associated (or correlated) with OtelloASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otello ASA has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and OtelloASA go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and OtelloASA

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 1.06 times more return on investment than OtelloASA. However, COLUMBIA SPORTSWEAR is 1.06 times more volatile than Otello ASA. It trades about 0.27 of its potential returns per unit of risk. Otello ASA is currently generating about 0.01 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

COLUMBIA SPORTSWEAR  vs.  Otello ASA

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COLUMBIA SPORTSWEAR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Otello ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otello ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COLUMBIA SPORTSWEAR and OtelloASA

The main advantage of trading using opposite COLUMBIA SPORTSWEAR and OtelloASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, OtelloASA 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 OtelloASA will offset losses from the drop in OtelloASA's long position.

The idea behind COLUMBIA SPORTSWEAR and Otello ASA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.