Correlation Between Cumulus Media and Westrock Coffee
Can any of the company-specific risk be diversified away by investing in both Cumulus Media and Westrock Coffee 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 Cumulus Media and Westrock Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Westrock Coffee, you can compare the effects of market volatilities on Cumulus Media and Westrock Coffee 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 Cumulus Media with a short position of Westrock Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Westrock Coffee.
Diversification Opportunities for Cumulus Media and Westrock Coffee
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cumulus and Westrock is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee and Cumulus Media 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 Cumulus Media Class are associated (or correlated) with Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Cumulus Media i.e., Cumulus Media and Westrock Coffee go up and down completely randomly.
Pair Corralation between Cumulus Media and Westrock Coffee
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Westrock Coffee. In addition to that, Cumulus Media is 1.79 times more volatile than Westrock Coffee. It trades about -0.14 of its total potential returns per unit of risk. Westrock Coffee is currently generating about -0.01 per unit of volatility. If you would invest 920.00 in Westrock Coffee on August 26, 2024 and sell it today you would lose (131.00) from holding Westrock Coffee or give up 14.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Westrock Coffee
Performance |
| Timeline |
| Cumulus Media Class |
| Westrock Coffee |
Cumulus Media and Westrock Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Westrock Coffee
The main advantage of trading using opposite Cumulus Media and Westrock Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media position performs unexpectedly, Westrock Coffee 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 Westrock Coffee will offset losses from the drop in Westrock Coffee's long position.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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