Correlation Between Indutrade and CVS Health
Can any of the company-specific risk be diversified away by investing in both Indutrade and CVS Health 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 Indutrade and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and CVS Health Corp, you can compare the effects of market volatilities on Indutrade and CVS Health 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 Indutrade with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and CVS Health.
Diversification Opportunities for Indutrade and CVS Health
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Indutrade and CVS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Indutrade 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 Indutrade AB are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Indutrade i.e., Indutrade and CVS Health go up and down completely randomly.
Pair Corralation between Indutrade and CVS Health
Assuming the 90 days trading horizon Indutrade AB is expected to generate 0.7 times more return on investment than CVS Health. However, Indutrade AB is 1.44 times less risky than CVS Health. It trades about 0.0 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.03 per unit of risk. If you would invest 28,552 in Indutrade AB on September 3, 2024 and sell it today you would lose (902.00) from holding Indutrade AB or give up 3.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.82% |
| Values | Daily Returns |
Indutrade AB vs. CVS Health Corp
Performance |
| Timeline |
| Indutrade AB |
| CVS Health Corp |
Indutrade and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and CVS Health
The main advantage of trading using opposite Indutrade and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Indutrade vs. Tyson Foods Cl | Indutrade vs. Liberty Media Corp | Indutrade vs. Monster Beverage Corp | Indutrade vs. Ebro Foods |
| CVS Health vs. Tata Steel Limited | CVS Health vs. Jacquet Metal Service | CVS Health vs. Scandinavian Tobacco Group | CVS Health vs. Cornish Metals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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