Correlation Between G-III Apparel and COLUMBIA SPORTSWEAR

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

By analyzing existing cross correlation between G III Apparel Group and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on G-III Apparel 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 G-III Apparel with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of G-III Apparel and COLUMBIA SPORTSWEAR.

Diversification Opportunities for G-III Apparel and COLUMBIA SPORTSWEAR

0.71

Correlation Coefficient

G-III Apparel  COLUMBIA SPORTSWEAR

Poor diversification

The 3 months correlation between G-III and COLUMBIA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and G-III Apparel 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 G III Apparel 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 G-III Apparel i.e., G-III Apparel and COLUMBIA SPORTSWEAR go up and down completely randomly.

Pair Corralation between G-III Apparel and COLUMBIA SPORTSWEAR

Assuming the 90 days trading horizon G-III Apparel is expected to generate 1.01 times less return on investment than COLUMBIA SPORTSWEAR. In addition to that, G-III Apparel is 1.93 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.03 of its total potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.05 per unit of volatility. If you would invest  6,890  in COLUMBIA SPORTSWEAR on October 5, 2024 and sell it today you would earn a total of  1,260  from holding COLUMBIA SPORTSWEAR or generate 18.29% return on investment over 90 days.

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

G III Apparel Group  vs.  COLUMBIA SPORTSWEAR

G III Apparel

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days G III Apparel Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, G-III Apparel unveiled solid returns over the last few months and may actually be approaching a breakup point.

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days COLUMBIA SPORTSWEAR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, COLUMBIA SPORTSWEAR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with G-III Apparel and COLUMBIA SPORTSWEAR

The main advantage of trading using opposite G-III Apparel and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G-III Apparel 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 G III Apparel 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.