Correlation Between CVS Health and Dassault Aviation
Can any of the company-specific risk be diversified away by investing in both CVS Health and Dassault Aviation 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 CVS Health and Dassault Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and Dassault Aviation SA, you can compare the effects of market volatilities on CVS Health and Dassault Aviation 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 CVS Health with a short position of Dassault Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Dassault Aviation.
Diversification Opportunities for CVS Health and Dassault Aviation
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Dassault is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation and CVS Health 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 CVS Health Corp are associated (or correlated) with Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of CVS Health i.e., CVS Health and Dassault Aviation go up and down completely randomly.
Pair Corralation between CVS Health and Dassault Aviation
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 2.28 times more return on investment than Dassault Aviation. However, CVS Health is 2.28 times more volatile than Dassault Aviation SA. It trades about 0.12 of its potential returns per unit of risk. Dassault Aviation SA is currently generating about 0.05 per unit of risk. If you would invest 5,517 in CVS Health Corp on September 3, 2024 and sell it today you would earn a total of 455.00 from holding CVS Health Corp or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Dassault Aviation SA
Performance |
| Timeline |
| CVS Health Corp |
| Dassault Aviation |
CVS Health and Dassault Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Dassault Aviation
The main advantage of trading using opposite CVS Health and Dassault Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Dassault Aviation 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 Dassault Aviation will offset losses from the drop in Dassault Aviation's long position.| CVS Health vs. Tata Steel Limited | CVS Health vs. Jacquet Metal Service | CVS Health vs. Scandinavian Tobacco Group | CVS Health vs. Cornish Metals |
| Dassault Aviation vs. Induction Healthcare Group | Dassault Aviation vs. Spire Healthcare Group | Dassault Aviation vs. Vulcan Materials Co | Dassault Aviation vs. CVS Health Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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