Correlation Between COLUMBIA SPORTSWEAR and Tradeweb Markets

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

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

Diversification Opportunities for COLUMBIA SPORTSWEAR and Tradeweb Markets

0.54

Correlation Coefficient

COLUMBIA SPORTSWEAR  Tradeweb Markets

Very weak diversification

The 3 months correlation between COLUMBIA and Tradeweb is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Tradeweb Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradeweb Markets 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 Tradeweb Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradeweb Markets has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Tradeweb Markets go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and Tradeweb Markets

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to under-perform the Tradeweb Markets. But the stock apears to be less risky and, when comparing its historical volatility, COLUMBIA SPORTSWEAR is 2.67 times less risky than Tradeweb Markets. The stock trades about -0.42 of its potential returns per unit of risk. The Tradeweb Markets is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  12,500  in Tradeweb Markets on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Tradeweb Markets or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

COLUMBIA SPORTSWEAR  vs.  Tradeweb Markets

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

4 of 100

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 comparatively stable basic indicators, COLUMBIA SPORTSWEAR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Tradeweb Markets

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tradeweb Markets are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tradeweb Markets is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with COLUMBIA SPORTSWEAR and Tradeweb Markets

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

The idea behind COLUMBIA SPORTSWEAR and Tradeweb Markets 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..