Correlation Between Barings BDC and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Barings BDC and Cumberland Pharmaceuticals 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 Barings BDC and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings BDC and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Barings BDC and Cumberland Pharmaceuticals 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 Barings BDC with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Cumberland Pharmaceuticals.
Diversification Opportunities for Barings BDC and Cumberland Pharmaceuticals
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barings and Cumberland is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Barings BDC 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 Barings BDC are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Barings BDC i.e., Barings BDC and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Barings BDC and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Barings BDC is expected to generate 1.47 times less return on investment than Cumberland Pharmaceuticals. But when comparing it to its historical volatility, Barings BDC is 5.59 times less risky than Cumberland Pharmaceuticals. It trades about 0.37 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Cumberland Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of 11.00 from holding Cumberland Pharmaceuticals or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings BDC vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Barings BDC |
| Cumberland Pharmaceuticals |
Barings BDC and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings BDC and Cumberland Pharmaceuticals
The main advantage of trading using opposite Barings BDC and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| Barings BDC vs. Runway Growth Finance | Barings BDC vs. OneMain Holdings | Barings BDC vs. Navient Corp | Barings BDC vs. Oaktree Specialty Lending |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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