Correlation Between Columbia Sportswear and Summit Bank

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

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

Diversification Opportunities for Columbia Sportswear and Summit Bank

0.01

Correlation Coefficient

Columbia Sportswear  Summit Bank

Significant diversification

The 3 months correlation between Columbia and Summit is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Summit Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Bank Group 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 Summit Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Bank Group has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Summit Bank go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Summit Bank

Given the investment horizon of 90 days Columbia Sportswear is expected to under-perform the Summit Bank. In addition to that, Columbia Sportswear is 1.79 times more volatile than Summit Bank Group. It trades about -0.09 of its total potential returns per unit of risk. Summit Bank Group is currently generating about -0.01 per unit of volatility. If you would invest  1,500  in Summit Bank Group on December 20, 2024 and sell it today you would lose (11.00) from holding Summit Bank Group or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Columbia Sportswear  vs.  Summit Bank Group

Columbia Sportswear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Sportswear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Summit Bank Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Summit Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Summit Bank is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Columbia Sportswear and Summit Bank

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

The idea behind Columbia Sportswear and Summit Bank Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.