Correlation Between Columbia Sportswear and Delta Apparel

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

By analyzing existing cross correlation between Columbia Sportswear and Delta Apparel, you can compare the effects of market volatilities on Columbia Sportswear and Delta Apparel 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 Delta Apparel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Delta Apparel.

Diversification Opportunities for Columbia Sportswear and Delta Apparel

-0.64

Correlation Coefficient

Columbia Sportswear  Delta Apparel

Excellent diversification

The 3 months correlation between Columbia and Delta is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Delta Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Apparel 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 Delta Apparel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Apparel has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Delta Apparel go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Delta Apparel

If you would invest  7,916  in Columbia Sportswear on October 10, 2024 and sell it today you would earn a total of  346.00  from holding Columbia Sportswear or generate 4.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Columbia Sportswear  vs.  Delta Apparel

Columbia Sportswear

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Columbia Sportswear is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Delta Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Delta Apparel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Sportswear and Delta Apparel

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

The idea behind Columbia Sportswear and Delta Apparel 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..