Correlation Between Cumberland Pharmaceuticals and Lucy Scientific
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Lucy Scientific 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 Lucy Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Lucy Scientific Discovery, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Lucy Scientific 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 Lucy Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Lucy Scientific.
Diversification Opportunities for Cumberland Pharmaceuticals and Lucy Scientific
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cumberland and Lucy is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Lucy Scientific Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucy Scientific Discovery 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 Lucy Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucy Scientific Discovery has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Lucy Scientific go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Lucy Scientific
If you would invest 119.00 in Cumberland Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Cumberland Pharmaceuticals or generate 15.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Lucy Scientific Discovery
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Lucy Scientific Discovery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cumberland Pharmaceuticals and Lucy Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Lucy Scientific
The main advantage of trading using opposite Cumberland Pharmaceuticals and Lucy Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Lucy Scientific 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 Lucy Scientific will offset losses from the drop in Lucy Scientific's long position.The idea behind Cumberland Pharmaceuticals and Lucy Scientific Discovery 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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