Correlation Between CVS Health and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both CVS Health and AMG Advanced 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 AMG Advanced 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 AMG Advanced Metallurgical, you can compare the effects of market volatilities on CVS Health and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and AMG Advanced.
Diversification Opportunities for CVS Health and AMG Advanced
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and AMG is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of CVS Health i.e., CVS Health and AMG Advanced go up and down completely randomly.
Pair Corralation between CVS Health and AMG Advanced
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 1.78 times more return on investment than AMG Advanced. However, CVS Health is 1.78 times more volatile than AMG Advanced Metallurgical. It trades about 0.11 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.14 per unit of risk. If you would invest 5,517 in CVS Health Corp on September 4, 2024 and sell it today you would earn a total of 424.00 from holding CVS Health Corp or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| CVS Health Corp |
| AMG Advanced Metallu |
CVS Health and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and AMG Advanced
The main advantage of trading using opposite CVS Health and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| CVS Health vs. AMG Advanced Metallurgical | CVS Health vs. Ryanair Holdings plc | CVS Health vs. Universal Music Group | CVS Health vs. Gear4music Plc |
| AMG Advanced vs. Coor Service Management | AMG Advanced vs. Telecom Italia SpA | AMG Advanced vs. Zoom Video Communications | AMG Advanced vs. Vulcan Materials Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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