Correlation Between Columbia Sportswear and TRAVEL +

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

By analyzing existing cross correlation between Columbia Sportswear and TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Columbia Sportswear and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and TRAVEL +.

Diversification Opportunities for Columbia Sportswear and TRAVEL +

0.81

Correlation Coefficient

Columbia Sportswear  TRAVEL +

Very poor diversification

The 3 months correlation between Columbia and TRAVEL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and TRAVEL + go up and down completely randomly.

Pair Corralation between Columbia Sportswear and TRAVEL +

Assuming the 90 days horizon Columbia Sportswear is expected to under-perform the TRAVEL +. But the stock apears to be less risky and, when comparing its historical volatility, Columbia Sportswear is 1.18 times less risky than TRAVEL +. The stock trades about -0.31 of its potential returns per unit of risk. The TRAVEL LEISURE DL 01 is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  5,050  in TRAVEL LEISURE DL 01 on October 13, 2024 and sell it today you would lose (130.00) from holding TRAVEL LEISURE DL 01 or give up 2.57% of portfolio value over 90 days.

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

Columbia Sportswear  vs.  TRAVEL LEISURE DL 01

Columbia Sportswear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 7 (%) 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.

TRAVEL LEISURE DL

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Columbia Sportswear and TRAVEL +

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

The idea behind Columbia Sportswear and TRAVEL LEISURE DL 01 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.