Correlation Between JD Sports and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both JD Sports 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 JD Sports and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JD Sports Fashion and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on JD Sports 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 JD Sports with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of JD Sports and Cumberland Pharmaceuticals.
Diversification Opportunities for JD Sports and Cumberland Pharmaceuticals
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JDSPY and Cumberland is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding JD Sports Fashion and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and JD Sports 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 JD Sports Fashion 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 JD Sports i.e., JD Sports and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between JD Sports and Cumberland Pharmaceuticals
Assuming the 90 days horizon JD Sports Fashion is expected to generate 1.15 times more return on investment than Cumberland Pharmaceuticals. However, JD Sports is 1.15 times more volatile than Cumberland Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 145.00 in JD Sports Fashion on September 3, 2024 and sell it today you would lose (15.00) from holding JD Sports Fashion or give up 10.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JD Sports Fashion vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| JD Sports Fashion |
| Cumberland Pharmaceuticals |
JD Sports and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JD Sports and Cumberland Pharmaceuticals
The main advantage of trading using opposite JD Sports and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD Sports 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.| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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