Correlation Between CVS Health and St Galler
Can any of the company-specific risk be diversified away by investing in both CVS Health and St Galler 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 St Galler 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 St Galler Kantonalbank, you can compare the effects of market volatilities on CVS Health and St Galler 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 St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and St Galler.
Diversification Opportunities for CVS Health and St Galler
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and 0QQZ is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank 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 St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of CVS Health i.e., CVS Health and St Galler go up and down completely randomly.
Pair Corralation between CVS Health and St Galler
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 3.0 times more return on investment than St Galler. However, CVS Health is 3.0 times more volatile than St Galler Kantonalbank. It trades about 0.44 of its potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.38 per unit of risk. If you would invest 4,364 in CVS Health Corp on October 25, 2024 and sell it today you would earn a total of 972.00 from holding CVS Health Corp or generate 22.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
CVS Health Corp vs. St Galler Kantonalbank
Performance |
| Timeline |
| CVS Health Corp |
| St Galler Kantonalbank |
CVS Health and St Galler Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and St Galler
The main advantage of trading using opposite CVS Health and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, St Galler 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 St Galler will offset losses from the drop in St Galler's long position.| CVS Health vs. Summit Materials Cl | CVS Health vs. Nordic Semiconductor ASA | CVS Health vs. Pentair PLC | CVS Health vs. Sealed Air Corp |
| St Galler vs. Europa Metals | St Galler vs. JD Sports Fashion | St Galler vs. Jacquet Metal Service | St Galler vs. Solstad Offshore ASA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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