Correlation Between COLUMBIA SPORTSWEAR and Perma Fix

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

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

Diversification Opportunities for COLUMBIA SPORTSWEAR and Perma Fix

-0.39

Correlation Coefficient

COLUMBIA SPORTSWEAR  Perma Fix

Very good diversification

The 3 months correlation between COLUMBIA and Perma is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 Perma Fix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Perma Fix go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and Perma Fix

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.38 times more return on investment than Perma Fix. However, COLUMBIA SPORTSWEAR is 2.6 times less risky than Perma Fix. It trades about 0.08 of its potential returns per unit of risk. Perma Fix Environmental Services is currently generating about -0.01 per unit of risk. If you would invest  7,471  in COLUMBIA SPORTSWEAR on October 6, 2024 and sell it today you would earn a total of  579.00  from holding COLUMBIA SPORTSWEAR or generate 7.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

COLUMBIA SPORTSWEAR  vs.  Perma Fix Environmental Servic

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COLUMBIA SPORTSWEAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Perma Fix Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perma Fix Environmental Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Perma Fix is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COLUMBIA SPORTSWEAR and Perma Fix

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

The idea behind COLUMBIA SPORTSWEAR and Perma Fix Environmental Services 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.