Correlation Between Columbia Sportswear and Hologic

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

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

Diversification Opportunities for Columbia Sportswear and Hologic

-0.59

Correlation Coefficient

Columbia Sportswear  Hologic

Excellent diversification

The 3 months correlation between Columbia and Hologic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic 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 Hologic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hologic has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Hologic go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Hologic

Assuming the 90 days horizon Columbia Sportswear is expected to generate 1.55 times more return on investment than Hologic. However, Columbia Sportswear is 1.55 times more volatile than Hologic. It trades about 0.12 of its potential returns per unit of risk. Hologic is currently generating about -0.18 per unit of risk. If you would invest  7,421  in Columbia Sportswear on October 6, 2024 and sell it today you would earn a total of  579.00  from holding Columbia Sportswear or generate 7.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Columbia Sportswear  vs.  Hologic

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. Despite nearly fragile basic indicators, Columbia Sportswear may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hologic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hologic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hologic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Columbia Sportswear and Hologic

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

The idea behind Columbia Sportswear and Hologic 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.