Correlation Between COLUMBIA SPORTSWEAR and Poste Italiane

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

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

Diversification Opportunities for COLUMBIA SPORTSWEAR and Poste Italiane

0.67

Correlation Coefficient

COLUMBIA SPORTSWEAR  Poste Italiane

Poor diversification

The 3 months correlation between COLUMBIA and Poste is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Poste Italiane SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poste Italiane SpA 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 Poste Italiane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poste Italiane SpA has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Poste Italiane go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and Poste Italiane

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to under-perform the Poste Italiane. In addition to that, COLUMBIA SPORTSWEAR is 1.69 times more volatile than Poste Italiane SpA. It trades about -0.06 of its total potential returns per unit of risk. Poste Italiane SpA is currently generating about 0.62 per unit of volatility. If you would invest  1,345  in Poste Italiane SpA on October 24, 2024 and sell it today you would earn a total of  91.00  from holding Poste Italiane SpA or generate 6.77% return on investment over 90 days.

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

COLUMBIA SPORTSWEAR  vs.  Poste Italiane SpA

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COLUMBIA SPORTSWEAR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Poste Italiane SpA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Poste Italiane SpA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Poste Italiane reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COLUMBIA SPORTSWEAR and Poste Italiane

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

The idea behind COLUMBIA SPORTSWEAR and Poste Italiane SpA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.