Correlation Between Bausch Health and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Bausch Health 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 Bausch Health and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bausch Health Companies and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Bausch Health 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 Bausch Health with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bausch Health and Cumberland Pharmaceuticals.
Diversification Opportunities for Bausch Health and Cumberland Pharmaceuticals
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bausch and Cumberland is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bausch Health Companies and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Bausch Health 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 Bausch Health Companies 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 Bausch Health i.e., Bausch Health and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Bausch Health and Cumberland Pharmaceuticals
Considering the 90-day investment horizon Bausch Health Companies is expected to under-perform the Cumberland Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Bausch Health Companies is 5.17 times less risky than Cumberland Pharmaceuticals. The stock trades about -0.01 of its potential returns per unit of risk. The Cumberland Pharmaceuticals is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Cumberland Pharmaceuticals on November 28, 2024 and sell it today you would earn a total of 283.00 from holding Cumberland Pharmaceuticals or generate 119.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bausch Health Companies vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Bausch Health Companies |
| Cumberland Pharmaceuticals |
Bausch Health and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bausch Health and Cumberland Pharmaceuticals
The main advantage of trading using opposite Bausch Health and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bausch Health 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.| Bausch Health vs. Viatris | Bausch Health vs. Tilray Inc | Bausch Health vs. Zoetis Inc | Bausch Health vs. Emergent Biosolutions |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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