Correlation Between CVS Health and Datagroup
Can any of the company-specific risk be diversified away by investing in both CVS Health and Datagroup 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 Datagroup 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 Datagroup SE, you can compare the effects of market volatilities on CVS Health and Datagroup 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 Datagroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Datagroup.
Diversification Opportunities for CVS Health and Datagroup
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Datagroup is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Datagroup SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datagroup SE 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 Datagroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datagroup SE has no effect on the direction of CVS Health i.e., CVS Health and Datagroup go up and down completely randomly.
Pair Corralation between CVS Health and Datagroup
Assuming the 90 days trading horizon CVS Health Corp is expected to under-perform the Datagroup. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.06 times less risky than Datagroup. The stock trades about -0.04 of its potential returns per unit of risk. The Datagroup SE is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 6,254 in Datagroup SE on August 28, 2024 and sell it today you would lose (1,819) from holding Datagroup SE or give up 29.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CVS Health Corp vs. Datagroup SE
Performance |
| Timeline |
| CVS Health Corp |
| Datagroup SE |
CVS Health and Datagroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Datagroup
The main advantage of trading using opposite CVS Health and Datagroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Datagroup 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 Datagroup will offset losses from the drop in Datagroup's long position.| CVS Health vs. Samsung Electronics Co | CVS Health vs. Samsung Electronics Co | CVS Health vs. Hyundai Motor | CVS Health vs. Toyota Motor Corp |
| Datagroup vs. BioNTech SE | Datagroup vs. Dolly Varden Silver | Datagroup vs. Albion Technology General | Datagroup vs. Roper Technologies |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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