Correlation Between CVS Health and First Majestic
Can any of the company-specific risk be diversified away by investing in both CVS Health and First Majestic 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 First Majestic 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 First Majestic Silver, you can compare the effects of market volatilities on CVS Health and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and First Majestic.
Diversification Opportunities for CVS Health and First Majestic
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of CVS Health i.e., CVS Health and First Majestic go up and down completely randomly.
Pair Corralation between CVS Health and First Majestic
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 0.48 times more return on investment than First Majestic. However, CVS Health Corp is 2.07 times less risky than First Majestic. It trades about 0.61 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.04 per unit of risk. If you would invest 4,375 in CVS Health Corp on November 1, 2024 and sell it today you would earn a total of 1,333 from holding CVS Health Corp or generate 30.47% 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. First Majestic Silver
Performance |
| Timeline |
| CVS Health Corp |
| First Majestic Silver |
CVS Health and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and First Majestic
The main advantage of trading using opposite CVS Health and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| CVS Health vs. Take Two Interactive Software | CVS Health vs. International Biotechnology Trust | CVS Health vs. Spotify Technology SA | CVS Health vs. Sunny Optical Technology |
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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 Valuation module to check real value of public entities based on technical and fundamental data.
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