Correlation Between Cumberland Pharmaceuticals and AMERICAN
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By analyzing existing cross correlation between Cumberland Pharmaceuticals and AMERICAN HONDA FINANCE, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and AMERICAN.
Diversification Opportunities for Cumberland Pharmaceuticals and AMERICAN
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cumberland and AMERICAN is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and AMERICAN HONDA FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN HONDA FINANCE 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN HONDA FINANCE has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and AMERICAN go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and AMERICAN
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 46.21 times more return on investment than AMERICAN. However, Cumberland Pharmaceuticals is 46.21 times more volatile than AMERICAN HONDA FINANCE. It trades about 0.22 of its potential returns per unit of risk. AMERICAN HONDA FINANCE is currently generating about -0.26 per unit of risk. If you would invest 120.00 in Cumberland Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of 122.00 from holding Cumberland Pharmaceuticals or generate 101.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. AMERICAN HONDA FINANCE
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| AMERICAN HONDA FINANCE |
Cumberland Pharmaceuticals and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and AMERICAN
The main advantage of trading using opposite Cumberland Pharmaceuticals and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.The idea behind Cumberland Pharmaceuticals and AMERICAN HONDA FINANCE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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