Correlation Between CVS Health and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both CVS Health and SoftBank Group 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 SoftBank Group 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 SoftBank Group Corp, you can compare the effects of market volatilities on CVS Health and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and SoftBank Group.
Diversification Opportunities for CVS Health and SoftBank Group
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and SoftBank is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of CVS Health i.e., CVS Health and SoftBank Group go up and down completely randomly.
Pair Corralation between CVS Health and SoftBank Group
Assuming the 90 days trading horizon CVS Health Corp is expected to under-perform the SoftBank Group. In addition to that, CVS Health is 1.34 times more volatile than SoftBank Group Corp. It trades about -0.05 of its total potential returns per unit of risk. SoftBank Group Corp is currently generating about -0.06 per unit of volatility. If you would invest 940,900 in SoftBank Group Corp on September 13, 2024 and sell it today you would lose (19,600) from holding SoftBank Group Corp or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
CVS Health Corp vs. SoftBank Group Corp
Performance |
| Timeline |
| CVS Health Corp |
| SoftBank Group Corp |
CVS Health and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and SoftBank Group
The main advantage of trading using opposite CVS Health and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| CVS Health vs. Samsung Electronics Co | CVS Health vs. Samsung Electronics Co | CVS Health vs. Hyundai Motor | CVS Health vs. Reliance Industries Ltd |
| SoftBank Group vs. Intuitive Investments Group | SoftBank Group vs. PureTech Health plc | SoftBank Group vs. Oakley Capital Investments | SoftBank Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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