Correlation Between Columbia Sportswear and Williams Companies

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

By analyzing existing cross correlation between Columbia Sportswear and The Williams Companies, you can compare the effects of market volatilities on Columbia Sportswear and Williams Companies 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 Williams Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and Williams Companies.

Diversification Opportunities for Columbia Sportswear and Williams Companies

0.1

Correlation Coefficient

Columbia Sportswear  Williams Companies

Average diversification

The 3 months correlation between Columbia and Williams is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and The Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Williams Companies has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and Williams Companies go up and down completely randomly.

Pair Corralation between Columbia Sportswear and Williams Companies

Assuming the 90 days horizon Columbia Sportswear is expected to under-perform the Williams Companies. In addition to that, Columbia Sportswear is 1.39 times more volatile than The Williams Companies. It trades about -0.06 of its total potential returns per unit of risk. The Williams Companies is currently generating about -0.06 per unit of volatility. If you would invest  5,200  in The Williams Companies on April 25, 2025 and sell it today you would lose (328.00) from holding The Williams Companies or give up 6.31% of portfolio value over 90 days.

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

Columbia Sportswear  vs.  The Williams Companies

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

The Williams Companies

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Columbia Sportswear and Williams Companies

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

The idea behind Columbia Sportswear and The Williams Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .