Correlation Between Cumberland Pharmaceuticals and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Biglari Holdings 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 Cumberland Pharmaceuticals and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Biglari Holdings, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Biglari Holdings 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 Cumberland Pharmaceuticals with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Biglari Holdings.
Diversification Opportunities for Cumberland Pharmaceuticals and Biglari Holdings
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cumberland and Biglari is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Biglari Holdings go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Biglari Holdings
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the Biglari Holdings. In addition to that, Cumberland Pharmaceuticals is 1.74 times more volatile than Biglari Holdings. It trades about -0.02 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.05 per unit of volatility. If you would invest 14,186 in Biglari Holdings on August 27, 2024 and sell it today you would earn a total of 6,455 from holding Biglari Holdings or generate 45.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Biglari Holdings
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Biglari Holdings |
Cumberland Pharmaceuticals and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Biglari Holdings
The main advantage of trading using opposite Cumberland Pharmaceuticals and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Cumberland Pharmaceuticals vs. Capricor Therapeutics | Cumberland Pharmaceuticals vs. Soleno Therapeutics | Cumberland Pharmaceuticals vs. Bio Path Holdings | Cumberland Pharmaceuticals vs. Moleculin Biotech |
| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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