Correlation Between Cumberland Pharmaceuticals and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and FTAI Aviation 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 FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and FTAI Aviation Ltd, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and FTAI Aviation 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 FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and FTAI Aviation.
Diversification Opportunities for Cumberland Pharmaceuticals and FTAI Aviation
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cumberland and FTAI is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation 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 FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and FTAI Aviation go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and FTAI Aviation
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the FTAI Aviation. In addition to that, Cumberland Pharmaceuticals is 2.34 times more volatile than FTAI Aviation Ltd. It trades about -0.18 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.11 per unit of volatility. If you would invest 2,703 in FTAI Aviation Ltd on August 29, 2024 and sell it today you would earn a total of 70.00 from holding FTAI Aviation Ltd or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| FTAI Aviation |
Cumberland Pharmaceuticals and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and FTAI Aviation
The main advantage of trading using opposite Cumberland Pharmaceuticals and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| Cumberland Pharmaceuticals vs. Phibro Animal Health | Cumberland Pharmaceuticals vs. Procaps Group SA | Cumberland Pharmaceuticals vs. Amphastar P | Cumberland Pharmaceuticals vs. Alkermes Plc |
| FTAI Aviation vs. Volaris | FTAI Aviation vs. Playa Hotels Resorts | FTAI Aviation vs. American Airlines Group | FTAI Aviation vs. Playtika Holding Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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