Correlation Between Cummins and Camber Energy
Can any of the company-specific risk be diversified away by investing in both Cummins and Camber Energy 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 Cummins and Camber Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cummins and Camber Energy, you can compare the effects of market volatilities on Cummins and Camber Energy 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 Cummins with a short position of Camber Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cummins and Camber Energy.
Diversification Opportunities for Cummins and Camber Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cummins and Camber is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cummins and Camber Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camber Energy and Cummins 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 Cummins are associated (or correlated) with Camber Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camber Energy has no effect on the direction of Cummins i.e., Cummins and Camber Energy go up and down completely randomly.
Pair Corralation between Cummins and Camber Energy
Considering the 90-day investment horizon Cummins is expected to generate 0.37 times more return on investment than Camber Energy. However, Cummins is 2.7 times less risky than Camber Energy. It trades about 0.27 of its potential returns per unit of risk. Camber Energy is currently generating about -0.08 per unit of risk. If you would invest 33,301 in Cummins on August 28, 2024 and sell it today you would earn a total of 4,226 from holding Cummins or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cummins vs. Camber Energy
Performance |
| Timeline |
| Cummins |
| Camber Energy |
Cummins and Camber Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cummins and Camber Energy
The main advantage of trading using opposite Cummins and Camber Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cummins position performs unexpectedly, Camber Energy 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 Camber Energy will offset losses from the drop in Camber Energy's long position.The idea behind Cummins and Camber Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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