Correlation Between Cumberland Pharmaceuticals and United States
Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and United States Steel, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and United States.
Diversification Opportunities for Cumberland Pharmaceuticals and United States
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cumberland and United is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and United States go up and down completely randomly.
Pair Corralation between Cumberland Pharmaceuticals and United States
Given the investment horizon of 90 days Cumberland Pharmaceuticals is expected to under-perform the United States. But the stock apears to be less risky and, when comparing its historical volatility, Cumberland Pharmaceuticals is 1.51 times less risky than United States. The stock trades about -0.34 of its potential returns per unit of risk. The United States Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,838 in United States Steel on August 28, 2024 and sell it today you would earn a total of 20.00 from holding United States Steel or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumberland Pharmaceuticals vs. United States Steel
Performance |
| Timeline |
| Cumberland Pharmaceuticals |
| United States Steel |
Cumberland Pharmaceuticals and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumberland Pharmaceuticals and United States
The main advantage of trading using opposite Cumberland Pharmaceuticals and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Cumberland Pharmaceuticals vs. Capricor Therapeutics | Cumberland Pharmaceuticals vs. Soleno Therapeutics | Cumberland Pharmaceuticals vs. Bio Path Holdings | Cumberland Pharmaceuticals vs. Moleculin Biotech |
| United States vs. Nucor Corp | United States vs. Steel Dynamics | United States vs. ArcelorMittal SA ADR | United States vs. Gerdau SA ADR |
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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