Correlation Between COLUMBIA SPORTSWEAR and Sporttotal

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

By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Sporttotal AG, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Sporttotal 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 Sporttotal. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Sporttotal.

Diversification Opportunities for COLUMBIA SPORTSWEAR and Sporttotal

-0.74

Correlation Coefficient

COLUMBIA SPORTSWEAR  Sporttotal

Pay attention - limited upside

The 3 months correlation between COLUMBIA and Sporttotal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Sporttotal AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporttotal AG 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 Sporttotal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporttotal AG has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Sporttotal go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and Sporttotal

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.38 times more return on investment than Sporttotal. However, COLUMBIA SPORTSWEAR is 2.61 times less risky than Sporttotal. It trades about 0.13 of its potential returns per unit of risk. Sporttotal AG is currently generating about -0.06 per unit of risk. If you would invest  7,272  in COLUMBIA SPORTSWEAR on September 3, 2024 and sell it today you would earn a total of  1,028  from holding COLUMBIA SPORTSWEAR or generate 14.14% return on investment over 90 days.

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

COLUMBIA SPORTSWEAR  vs.  Sporttotal AG

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, COLUMBIA SPORTSWEAR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sporttotal AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sporttotal AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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.

Pair Trading with COLUMBIA SPORTSWEAR and Sporttotal

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

The idea behind COLUMBIA SPORTSWEAR and Sporttotal AG 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.