Correlation Between Cumberland Pharmaceuticals and 48126BAA1
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By analyzing existing cross correlation between Cumberland Pharmaceuticals and JP Morgan Chase, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and 48126BAA1 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 48126BAA1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and 48126BAA1.
Diversification Opportunities for Cumberland Pharmaceuticals and 48126BAA1
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cumberland and 48126BAA1 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and JP Morgan Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JP Morgan Chase 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 48126BAA1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JP Morgan Chase has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and 48126BAA1 go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and 48126BAA1
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 4.87 times more return on investment than 48126BAA1. However, Cumberland Pharmaceuticals is 4.87 times more volatile than JP Morgan Chase. It trades about 0.1 of its potential returns per unit of risk. JP Morgan Chase is currently generating about -0.06 per unit of risk. If you would invest 114.00 in Cumberland Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of 11.00 from holding Cumberland Pharmaceuticals or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. JP Morgan Chase
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| JP Morgan Chase |
Cumberland Pharmaceuticals and 48126BAA1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and 48126BAA1
The main advantage of trading using opposite Cumberland Pharmaceuticals and 48126BAA1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, 48126BAA1 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 48126BAA1 will offset losses from the drop in 48126BAA1's long position.The idea behind Cumberland Pharmaceuticals and JP Morgan Chase 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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