Correlation Between Cumberland Pharmaceuticals and Figs
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Figs 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 Figs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Figs Inc, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Figs 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 Figs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Figs.
Diversification Opportunities for Cumberland Pharmaceuticals and Figs
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cumberland and Figs is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc 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 Figs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figs Inc has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Figs go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Figs
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 0.83 times more return on investment than Figs. However, Cumberland Pharmaceuticals is 1.21 times less risky than Figs. It trades about 0.15 of its potential returns per unit of risk. Figs Inc is currently generating about -0.1 per unit of risk. If you would invest 119.00 in Cumberland Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Cumberland Pharmaceuticals or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Figs Inc
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Figs Inc |
Cumberland Pharmaceuticals and Figs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Figs
The main advantage of trading using opposite Cumberland Pharmaceuticals and Figs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Figs 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 Figs will offset losses from the drop in Figs' long position.The idea behind Cumberland Pharmaceuticals and Figs Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |