Correlation Between Sealed Air and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Sealed Air 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 Sealed Air and Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on Sealed Air 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 Sealed Air with a short position of Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and Cumberland Pharmaceuticals.
Diversification Opportunities for Sealed Air and Cumberland Pharmaceuticals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sealed and Cumberland is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals and Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between Sealed Air and Cumberland Pharmaceuticals
Considering the 90-day investment horizon Sealed Air is expected to generate 0.39 times more return on investment than Cumberland Pharmaceuticals. However, Sealed Air is 2.57 times less risky than Cumberland Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about 0.0 per unit of risk. If you would invest 3,404 in Sealed Air on September 5, 2024 and sell it today you would earn a total of 261.00 from holding Sealed Air or generate 7.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sealed Air vs. Cumberland Pharmaceuticals
Performance |
Timeline |
Sealed Air |
Cumberland Pharmaceuticals |
Sealed Air and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and Cumberland Pharmaceuticals
The main advantage of trading using opposite Sealed Air and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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.Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
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 |