Correlation Between COLUMBIA SPORTSWEAR and Dolly Varden

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

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

Diversification Opportunities for COLUMBIA SPORTSWEAR and Dolly Varden

-0.65

Correlation Coefficient

COLUMBIA SPORTSWEAR  Dolly Varden

Excellent diversification

The 3 months correlation between COLUMBIA and Dolly is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver 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 Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Dolly Varden go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and Dolly Varden

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.1 times more return on investment than Dolly Varden. However, COLUMBIA SPORTSWEAR is 10.4 times less risky than Dolly Varden. It trades about -0.53 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about -0.07 per unit of risk. If you would invest  8,550  in COLUMBIA SPORTSWEAR on October 12, 2024 and sell it today you would lose (550.00) from holding COLUMBIA SPORTSWEAR or give up 6.43% of portfolio value over 90 days.

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

COLUMBIA SPORTSWEAR  vs.  Dolly Varden Silver

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, COLUMBIA SPORTSWEAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dolly Varden Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolly Varden Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COLUMBIA SPORTSWEAR and Dolly Varden

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

The idea behind COLUMBIA SPORTSWEAR and Dolly Varden Silver 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.