Correlation Between Columbia Sportswear and Lakeland Industries

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

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

Diversification Opportunities for Columbia Sportswear and Lakeland Industries

-0.19

Correlation Coefficient

Columbia Sportswear  Lakeland Industries

Good diversification

The 3 months correlation between Columbia and Lakeland is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries 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 Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Lakeland Industries go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Lakeland Industries

Given the investment horizon of 90 days Columbia Sportswear is expected to generate 0.63 times more return on investment than Lakeland Industries. However, Columbia Sportswear is 1.58 times less risky than Lakeland Industries. It trades about 0.06 of its potential returns per unit of risk. Lakeland Industries is currently generating about 0.03 per unit of risk. If you would invest  8,724  in Columbia Sportswear on November 28, 2024 and sell it today you would earn a total of  455.00  from holding Columbia Sportswear or generate 5.22% 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.  Lakeland Industries

Columbia Sportswear

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 4 (%) 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 March 2025.

Lakeland Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Lakeland Industries is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Columbia Sportswear and Lakeland Industries

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

The idea behind Columbia Sportswear and Lakeland Industries 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..