Correlation Between TRAVEL + and Columbia Sportswear

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

By analyzing existing cross correlation between TRAVEL LEISURE DL 01 and Columbia Sportswear, you can compare the effects of market volatilities on TRAVEL + 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 TRAVEL + with a short position of Columbia Sportswear. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAVEL + and Columbia Sportswear.

Diversification Opportunities for TRAVEL + and Columbia Sportswear

-0.35

Correlation Coefficient

TRAVEL +  Columbia Sportswear

Very good diversification

The 3 months correlation between TRAVEL and Columbia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding TRAVEL LEISURE DL 01 and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear and TRAVEL + 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 TRAVEL LEISURE DL 01 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 TRAVEL + i.e., TRAVEL + and Columbia Sportswear go up and down completely randomly.

Pair Corralation between TRAVEL + and Columbia Sportswear

Assuming the 90 days trading horizon TRAVEL LEISURE DL 01 is expected to generate 0.77 times more return on investment than Columbia Sportswear. However, TRAVEL LEISURE DL 01 is 1.3 times less risky than Columbia Sportswear. It trades about 0.23 of its potential returns per unit of risk. Columbia Sportswear is currently generating about -0.06 per unit of risk. If you would invest  3,836  in TRAVEL LEISURE DL 01 on April 25, 2025 and sell it today you would earn a total of  1,004  from holding TRAVEL LEISURE DL 01 or generate 26.17% return on investment over 90 days.

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

TRAVEL LEISURE DL 01  vs.  Columbia Sportswear

TRAVEL LEISURE DL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TRAVEL + and Columbia Sportswear

The main advantage of trading using opposite TRAVEL + and Columbia Sportswear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAVEL + 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 TRAVEL LEISURE DL 01 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.