Correlation Between Columbia Sportswear and Transurban

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

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

Diversification Opportunities for Columbia Sportswear and Transurban

0.46

Correlation Coefficient

Columbia Sportswear  Transurban

Very weak diversification

The 3 months correlation between Columbia and Transurban is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Transurban go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Transurban

Assuming the 90 days horizon Columbia Sportswear is expected to under-perform the Transurban. In addition to that, Columbia Sportswear is 1.81 times more volatile than Transurban Group. It trades about -0.13 of its total potential returns per unit of risk. Transurban Group is currently generating about -0.04 per unit of volatility. If you would invest  780.00  in Transurban Group on December 23, 2024 and sell it today you would lose (23.00) from holding Transurban Group or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Columbia Sportswear  vs.  Transurban 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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Transurban Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transurban 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 Transurban

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

The idea behind Columbia Sportswear and Transurban 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.