Correlation Between Planet Image and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Planet Image 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 Planet Image and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Image International and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Planet Image 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 Planet Image with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Image and Cumberland Pharmaceuticals.
Diversification Opportunities for Planet Image and Cumberland Pharmaceuticals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Planet and Cumberland is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Planet Image International and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Planet Image 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 Planet Image International 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 Planet Image i.e., Planet Image and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Planet Image and Cumberland Pharmaceuticals
Given the investment horizon of 90 days Planet Image International is expected to generate 2.18 times more return on investment than Cumberland Pharmaceuticals. However, Planet Image is 2.18 times more volatile than Cumberland Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 279.00 in Planet Image International on September 5, 2024 and sell it today you would earn a total of 23.00 from holding Planet Image International or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 44.04% |
| Values | Daily Returns |
Planet Image International vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| Planet Image Interna |
| Cumberland Pharmaceuticals |
Planet Image and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Image and Cumberland Pharmaceuticals
The main advantage of trading using opposite Planet Image and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Image 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.| Planet Image vs. Cumberland Pharmaceuticals | Planet Image vs. Ironveld Plc | Planet Image vs. Omni Health | Planet Image vs. RadNet Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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