Correlation Between Valneva SE and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Valneva SE 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 Valneva SE and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valneva SE ADR and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Valneva SE 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 Valneva SE with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Cumberland Pharmaceuticals.
Diversification Opportunities for Valneva SE and Cumberland Pharmaceuticals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Valneva and Cumberland is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Valneva SE 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 Valneva SE ADR 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 Valneva SE i.e., Valneva SE and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Valneva SE and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Valneva SE is expected to generate 12.32 times less return on investment than Cumberland Pharmaceuticals. But when comparing it to its historical volatility, Valneva SE ADR is 2.31 times less risky than Cumberland Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 182.00 in Cumberland Pharmaceuticals on December 7, 2024 and sell it today you would earn a total of 479.00 from holding Cumberland Pharmaceuticals or generate 263.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Valneva SE ADR |
| Cumberland Pharmaceuticals |
Valneva SE and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and Cumberland Pharmaceuticals
The main advantage of trading using opposite Valneva SE and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE 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.| Valneva SE vs. NuCana PLC | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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