Correlation Between CHRISTIAN DIOR and COLUMBIA SPORTSWEAR

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

By analyzing existing cross correlation between CHRISTIAN DIOR ADR14EO2 and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on CHRISTIAN DIOR 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 CHRISTIAN DIOR with a short position of COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRISTIAN DIOR and COLUMBIA SPORTSWEAR.

Diversification Opportunities for CHRISTIAN DIOR and COLUMBIA SPORTSWEAR

-0.33

Correlation Coefficient

CHRISTIAN DIOR  COLUMBIA SPORTSWEAR

Very good diversification

The 3 months correlation between CHRISTIAN and COLUMBIA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding CHRISTIAN DIOR ADR14EO2 and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR and CHRISTIAN DIOR 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 CHRISTIAN DIOR ADR14EO2 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 CHRISTIAN DIOR i.e., CHRISTIAN DIOR and COLUMBIA SPORTSWEAR go up and down completely randomly.

Pair Corralation between CHRISTIAN DIOR and COLUMBIA SPORTSWEAR

Assuming the 90 days trading horizon CHRISTIAN DIOR ADR14EO2 is expected to generate 1.29 times more return on investment than COLUMBIA SPORTSWEAR. However, CHRISTIAN DIOR is 1.29 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.27 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.19 per unit of risk. If you would invest  12,952  in CHRISTIAN DIOR ADR14EO2 on September 15, 2024 and sell it today you would earn a total of  1,748  from holding CHRISTIAN DIOR ADR14EO2 or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

CHRISTIAN DIOR ADR14EO2  vs.  COLUMBIA SPORTSWEAR

CHRISTIAN DIOR ADR14EO2

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHRISTIAN DIOR ADR14EO2 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CHRISTIAN DIOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

COLUMBIA SPORTSWEAR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COLUMBIA SPORTSWEAR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, COLUMBIA SPORTSWEAR unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHRISTIAN DIOR and COLUMBIA SPORTSWEAR

The main advantage of trading using opposite CHRISTIAN DIOR and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHRISTIAN DIOR 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 CHRISTIAN DIOR ADR14EO2 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.