Correlation Between Cumberland Pharmaceuticals and Kite Realty
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Kite Realty 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 Kite Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Kite Realty Group, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Kite Realty 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 Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Kite Realty.
Diversification Opportunities for Cumberland Pharmaceuticals and Kite Realty
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cumberland and Kite is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Kite Realty go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Kite Realty
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 12.82 times more return on investment than Kite Realty. However, Cumberland Pharmaceuticals is 12.82 times more volatile than Kite Realty Group. It trades about 0.26 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.18 per unit of risk. If you would invest 236.00 in Cumberland Pharmaceuticals on November 29, 2024 and sell it today you would earn a total of 283.00 from holding Cumberland Pharmaceuticals or generate 119.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Kite Realty Group
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Kite Realty Group |
Cumberland Pharmaceuticals and Kite Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Kite Realty
The main advantage of trading using opposite Cumberland Pharmaceuticals and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Kite Realty 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 Kite Realty will offset losses from the drop in Kite Realty's long position.The idea behind Cumberland Pharmaceuticals and Kite Realty Group 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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