Correlation Between Destination and Columbia Sportswear

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

By analyzing existing cross correlation between Destination XL Group and Columbia Sportswear, you can compare the effects of market volatilities on Destination and Columbia Sportswear 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 Destination with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destination and Columbia Sportswear.

Diversification Opportunities for Destination and Columbia Sportswear

-0.43

Correlation Coefficient

Destination  Columbia Sportswear

Very good diversification

The 3 months correlation between Destination and Columbia is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Destination XL Group and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and Destination 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 Destination XL Group are associated (or correlated) with Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Destination i.e., Destination and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Destination and Columbia Sportswear

Given the investment horizon of 90 days Destination is expected to generate 2.68 times less return on investment than Columbia Sportswear. In addition to that, Destination is 2.4 times more volatile than Columbia Sportswear. It trades about 0.01 of its total potential returns per unit of risk. Columbia Sportswear is currently generating about 0.03 per unit of volatility. If you would invest  8,047  in Columbia Sportswear on October 8, 2024 and sell it today you would earn a total of  220.00  from holding Columbia Sportswear or generate 2.73% return on investment over 90 days.

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

Destination XL Group  vs.  Columbia Sportswear

Destination XL Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Destination XL Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Destination is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Columbia Sportswear

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Columbia Sportswear is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Destination and Columbia Sportswear

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

The idea behind Destination XL Group and Columbia Sportswear 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.