Correlation Between Air Products and CVS Health
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and CVS Health Corp, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and CVS Health.
Diversification Opportunities for Air Products and CVS Health
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and CVS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals 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 Air Products 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 Air Products Chemicals 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 Air Products i.e., Air Products and CVS Health go up and down completely randomly.
Pair Corralation between Air Products and CVS Health
Assuming the 90 days trading horizon Air Products Chemicals is expected to generate 2.45 times more return on investment than CVS Health. However, Air Products is 2.45 times more volatile than CVS Health Corp. It trades about 0.02 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.05 per unit of risk. If you would invest 29,283 in Air Products Chemicals on September 24, 2024 and sell it today you would earn a total of 37.00 from holding Air Products Chemicals or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Air Products Chemicals vs. CVS Health Corp
Performance |
| Timeline |
| Air Products Chemicals |
| CVS Health Corp |
Air Products and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and CVS Health
The main advantage of trading using opposite Air Products and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. FC Investment Trust | Air Products vs. Axway Software SA | Air Products vs. Livermore Investments Group | Air Products vs. Atresmedia |
| CVS Health vs. G5 Entertainment AB | CVS Health vs. Catalyst Media Group | CVS Health vs. Auction Technology Group | CVS Health vs. Pfeiffer Vacuum Technology |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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