Correlation Between COLUMBIA SPORTSWEAR and LendingTree

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Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and LendingTree 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 LendingTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and LendingTree, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and LendingTree 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 LendingTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and LendingTree.

Diversification Opportunities for COLUMBIA SPORTSWEAR and LendingTree

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between COLUMBIA and LendingTree is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and LendingTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingTree 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 LendingTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingTree has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and LendingTree go up and down completely randomly.

Pair Corralation between COLUMBIA SPORTSWEAR and LendingTree

Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 3.37 times less return on investment than LendingTree. But when comparing it to its historical volatility, COLUMBIA SPORTSWEAR is 2.73 times less risky than LendingTree. It trades about 0.04 of its potential returns per unit of risk. LendingTree is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,920  in LendingTree on October 2, 2024 and sell it today you would earn a total of  799.00  from holding LendingTree or generate 27.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

COLUMBIA SPORTSWEAR  vs.  LendingTree

 Performance 
       Timeline  
COLUMBIA SPORTSWEAR 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
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. In spite of comparatively uncertain basic indicators, COLUMBIA SPORTSWEAR may actually be approaching a critical reversion point that can send shares even higher in January 2025.
LendingTree 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LendingTree has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COLUMBIA SPORTSWEAR and LendingTree Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with COLUMBIA SPORTSWEAR and LendingTree

The main advantage of trading using opposite COLUMBIA SPORTSWEAR and LendingTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, LendingTree 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 LendingTree will offset losses from the drop in LendingTree's long position.
The idea behind COLUMBIA SPORTSWEAR and LendingTree 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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