Correlation Between Collegium Pharmaceutical and CbdMD
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and CbdMD 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 Collegium Pharmaceutical and CbdMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and cbdMD Inc, you can compare the effects of market volatilities on Collegium Pharmaceutical and CbdMD 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 Collegium Pharmaceutical with a short position of CbdMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and CbdMD.
Diversification Opportunities for Collegium Pharmaceutical and CbdMD
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Collegium and CbdMD is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and CbdMD go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and CbdMD
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 0.44 times more return on investment than CbdMD. However, Collegium Pharmaceutical is 2.25 times less risky than CbdMD. It trades about -0.24 of its potential returns per unit of risk. cbdMD Inc is currently generating about -0.11 per unit of risk. If you would invest 3,513 in Collegium Pharmaceutical on August 27, 2024 and sell it today you would lose (434.00) from holding Collegium Pharmaceutical or give up 12.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. cbdMD Inc
Performance |
| Timeline |
| Collegium Pharmaceutical |
| cbdMD Inc |
Collegium Pharmaceutical and CbdMD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and CbdMD
The main advantage of trading using opposite Collegium Pharmaceutical and CbdMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, CbdMD 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 CbdMD will offset losses from the drop in CbdMD's long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
| CbdMD vs. Capricor Therapeutics | CbdMD vs. Soleno Therapeutics | CbdMD vs. Bio Path Holdings | CbdMD vs. Moleculin Biotech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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