Correlation Between Funko and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Funko 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 Funko and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Funko Inc and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Funko 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 Funko with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Cumberland Pharmaceuticals.
Diversification Opportunities for Funko and Cumberland Pharmaceuticals
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Funko and Cumberland is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Funko 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 Funko Inc 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 Funko i.e., Funko and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Funko and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Funko Inc is expected to generate 1.04 times more return on investment than Cumberland Pharmaceuticals. However, Funko is 1.04 times more volatile than Cumberland Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest 1,039 in Funko Inc on August 25, 2024 and sell it today you would earn a total of 22.00 from holding Funko Inc or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Funko Inc vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Funko Inc |
| Cumberland Pharmaceuticals |
Funko and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Funko and Cumberland Pharmaceuticals
The main advantage of trading using opposite Funko and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko 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.The idea behind Funko Inc and Cumberland Pharmaceuticals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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