Correlation Between Vince Holding and Columbia Sportswear

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

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

Diversification Opportunities for Vince Holding and Columbia Sportswear

-0.1

Correlation Coefficient

Vince Holding  Columbia Sportswear

Good diversification

The 3 months correlation between Vince and Columbia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vince Holding Corp and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and Vince Holding 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 Vince Holding 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 Vince Holding i.e., Vince Holding and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Vince Holding and Columbia Sportswear

Given the investment horizon of 90 days Vince Holding Corp is expected to under-perform the Columbia Sportswear. In addition to that, Vince Holding is 2.76 times more volatile than Columbia Sportswear. It trades about -0.02 of its total potential returns per unit of risk. Columbia Sportswear is currently generating about 0.08 per unit of volatility. If you would invest  8,044  in Columbia Sportswear on August 30, 2024 and sell it today you would earn a total of  672.00  from holding Columbia Sportswear or generate 8.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Vince Holding Corp  vs.  Columbia Sportswear

Vince Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vince Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Vince Holding is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Columbia Sportswear

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Columbia Sportswear may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vince Holding and Columbia Sportswear

The main advantage of trading using opposite Vince Holding and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vince Holding 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 Vince Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.