Correlation Between Freedom Bank and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Freedom Bank 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 Freedom Bank and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Freedom Bank 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 Freedom Bank with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Cumberland Pharmaceuticals.
Diversification Opportunities for Freedom Bank and Cumberland Pharmaceuticals
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and Cumberland is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Freedom Bank and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Cumberland Pharmaceuticals. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 3.09 times less risky than Cumberland Pharmaceuticals. The otc stock trades about -0.06 of its potential returns per unit of risk. The Cumberland Pharmaceuticals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Cumberland Pharmaceuticals on September 5, 2024 and sell it today you would lose (101.00) from holding Cumberland Pharmaceuticals or give up 44.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.02% |
| Values | Daily Returns |
Freedom Bank of vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Freedom Bank |
| Cumberland Pharmaceuticals |
Freedom Bank and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Cumberland Pharmaceuticals
The main advantage of trading using opposite Freedom Bank and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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.| Freedom Bank vs. Western Asset Global | Freedom Bank vs. Invesco Trust For | Freedom Bank vs. Logan Ridge Finance | Freedom Bank vs. Invesco Advantage MIT |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |