Correlation Between Eagle Pharmaceuticals and CbdMD

Can any of the company-specific risk be diversified away by investing in both Eagle Pharmaceuticals and CbdMD 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 Eagle Pharmaceuticals and CbdMD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Pharmaceuticals and cbdMD Inc, you can compare the effects of market volatilities on Eagle Pharmaceuticals and CbdMD 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 Eagle Pharmaceuticals with a short position of CbdMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Pharmaceuticals and CbdMD.

Diversification Opportunities for Eagle Pharmaceuticals and CbdMD

-0.06

Correlation Coefficient

Eagle Pharmaceuticals  CbdMD

Good diversification

The 3 months correlation between Eagle and CbdMD is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Pharmaceuticals and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD Inc and Eagle Pharmaceuticals 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 Eagle Pharmaceuticals are associated (or correlated) with CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Eagle Pharmaceuticals i.e., Eagle Pharmaceuticals and CbdMD go up and down completely randomly.

Pair Corralation between Eagle Pharmaceuticals and CbdMD

Given the investment horizon of 90 days Eagle Pharmaceuticals is expected to under-perform the CbdMD. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Pharmaceuticals is 1.07 times less risky than CbdMD. The stock trades about -0.17 of its potential returns per unit of risk. The cbdMD Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  71.00  in cbdMD Inc on March 4, 2024 and sell it today you would lose (3.00) from holding cbdMD Inc or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Eagle Pharmaceuticals  vs.  cbdMD Inc

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

cbdMD Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days cbdMD Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CbdMD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eagle Pharmaceuticals and CbdMD

The main advantage of trading using opposite Eagle Pharmaceuticals and CbdMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Pharmaceuticals position performs unexpectedly, CbdMD 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 CbdMD will offset losses from the drop in CbdMD's long position.

The idea behind Eagle Pharmaceuticals and cbdMD Inc 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.