Correlation Between COLUMBIA SPORTSWEAR and ENN Energy

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

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

Diversification Opportunities for COLUMBIA SPORTSWEAR and ENN Energy

0.54

Correlation Coefficient

COLUMBIA SPORTSWEAR  ENN Energy

Very weak diversification

The 3 months correlation between COLUMBIA and ENN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and ENN Energy go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and ENN Energy

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.61 times more return on investment than ENN Energy. However, COLUMBIA SPORTSWEAR is 1.63 times less risky than ENN Energy. It trades about 0.27 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about 0.06 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

COLUMBIA SPORTSWEAR  vs.  ENN Energy Holdings

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.

ENN Energy Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENN Energy Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, ENN Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COLUMBIA SPORTSWEAR and ENN Energy

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

The idea behind COLUMBIA SPORTSWEAR and ENN Energy Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.