Correlation Between Cumberland Pharmaceuticals and Occidental
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By analyzing existing cross correlation between Cumberland Pharmaceuticals and Occidental Petroleum 8875, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Occidental 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 Occidental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Occidental.
Diversification Opportunities for Cumberland Pharmaceuticals and Occidental
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cumberland and Occidental is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Occidental Petroleum 8875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Occidental Petroleum 8875 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 Occidental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Occidental Petroleum 8875 has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Occidental go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Occidental
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the Occidental. In addition to that, Cumberland Pharmaceuticals is 10.8 times more volatile than Occidental Petroleum 8875. It trades about -0.03 of its total potential returns per unit of risk. Occidental Petroleum 8875 is currently generating about 0.01 per unit of volatility. If you would invest 11,652 in Occidental Petroleum 8875 on September 3, 2024 and sell it today you would earn a total of 46.00 from holding Occidental Petroleum 8875 or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Occidental Petroleum 8875
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Occidental Petroleum 8875 |
Cumberland Pharmaceuticals and Occidental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Occidental
The main advantage of trading using opposite Cumberland Pharmaceuticals and Occidental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Occidental 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 Occidental will offset losses from the drop in Occidental's long position.The idea behind Cumberland Pharmaceuticals and Occidental Petroleum 8875 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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