Correlation Between STRAYER EDUCATION and COLUMBIA SPORTSWEAR

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

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

Diversification Opportunities for STRAYER EDUCATION and COLUMBIA SPORTSWEAR

0.55

Correlation Coefficient

STRAYER EDUCATION  COLUMBIA SPORTSWEAR

Very weak diversification

The 3 months correlation between STRAYER and COLUMBIA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding STRAYER EDUCATION and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and STRAYER EDUCATION 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 STRAYER EDUCATION 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 STRAYER EDUCATION i.e., STRAYER EDUCATION and COLUMBIA SPORTSWEAR go up and down completely randomly.

Pair Corralation between STRAYER EDUCATION and COLUMBIA SPORTSWEAR

Assuming the 90 days trading horizon STRAYER EDUCATION is expected to generate 1.24 times more return on investment than COLUMBIA SPORTSWEAR. However, STRAYER EDUCATION is 1.24 times more volatile than COLUMBIA SPORTSWEAR. It trades about -0.08 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about -0.12 per unit of risk. If you would invest  8,786  in STRAYER EDUCATION on December 23, 2024 and sell it today you would lose (1,286) from holding STRAYER EDUCATION or give up 14.64% of portfolio value over 90 days.

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

STRAYER EDUCATION  vs.  COLUMBIA SPORTSWEAR

STRAYER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days STRAYER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COLUMBIA SPORTSWEAR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with STRAYER EDUCATION and COLUMBIA SPORTSWEAR

The main advantage of trading using opposite STRAYER EDUCATION and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRAYER EDUCATION 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 STRAYER EDUCATION 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.