Correlation Between Dennys Corp and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Dennys Corp and Cumberland Pharmaceuticals 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 Dennys Corp and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dennys Corp and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Dennys Corp and Cumberland Pharmaceuticals 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 Dennys Corp with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dennys Corp and Cumberland Pharmaceuticals.
Diversification Opportunities for Dennys Corp and Cumberland Pharmaceuticals
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dennys and Cumberland is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Dennys Corp 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 Dennys Corp are associated (or correlated) with Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of Dennys Corp i.e., Dennys Corp and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Dennys Corp and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Dennys Corp is expected to under-perform the Cumberland Pharmaceuticals. In addition to that, Dennys Corp is 1.14 times more volatile than Cumberland Pharmaceuticals. It trades about -0.19 of its total potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.04 per unit of volatility. If you would invest 507.00 in Cumberland Pharmaceuticals on January 18, 2025 and sell it today you would lose (31.00) from holding Cumberland Pharmaceuticals or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dennys Corp vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Dennys Corp |
| Cumberland Pharmaceuticals |
Dennys Corp and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dennys Corp and Cumberland Pharmaceuticals
The main advantage of trading using opposite Dennys Corp and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dennys Corp position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| Dennys Corp vs. Brinker International | Dennys Corp vs. Bloomin Brands | Dennys Corp vs. Jack In The | Dennys Corp vs. BJs Restaurants |
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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