Correlation Between Cumberland Pharmaceuticals and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Western Acquisition Ventures, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Western Acquisition.
Diversification Opportunities for Cumberland Pharmaceuticals and Western Acquisition
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cumberland and Western is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Western Acquisition go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and Western Acquisition
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to generate 2.04 times more return on investment than Western Acquisition. However, Cumberland Pharmaceuticals is 2.04 times more volatile than Western Acquisition Ventures. It trades about 0.0 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about -0.01 per unit of risk. If you would invest 148.00 in Cumberland Pharmaceuticals on September 1, 2024 and sell it today you would lose (8.00) from holding Cumberland Pharmaceuticals or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. Western Acquisition Ventures
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| Western Acquisition |
Cumberland Pharmaceuticals and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and Western Acquisition
The main advantage of trading using opposite Cumberland Pharmaceuticals and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.The idea behind Cumberland Pharmaceuticals and Western Acquisition Ventures 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |