Correlation Between CVS Health and 70GD
Can any of the company-specific risk be diversified away by investing in both CVS Health and 70GD 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 70GD 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 70GD, you can compare the effects of market volatilities on CVS Health and 70GD 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 70GD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and 70GD.
Diversification Opportunities for CVS Health and 70GD
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and 70GD is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and 70GD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 70GD 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 70GD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 70GD has no effect on the direction of CVS Health i.e., CVS Health and 70GD go up and down completely randomly.
Pair Corralation between CVS Health and 70GD
Assuming the 90 days trading horizon CVS Health Corp is expected to under-perform the 70GD. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 21.5 times less risky than 70GD. The stock trades about -0.05 of its potential returns per unit of risk. The 70GD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 79.00 in 70GD on September 24, 2024 and sell it today you would lose (8.00) from holding 70GD or give up 10.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CVS Health Corp vs. 70GD
Performance |
| Timeline |
| CVS Health Corp |
| 70GD |
CVS Health and 70GD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and 70GD
The main advantage of trading using opposite CVS Health and 70GD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, 70GD 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 70GD will offset losses from the drop in 70GD's long position.| CVS Health vs. G5 Entertainment AB | CVS Health vs. Catalyst Media Group | CVS Health vs. Auction Technology Group | CVS Health vs. Pfeiffer Vacuum Technology |
| 70GD vs. Ryanair Holdings plc | 70GD vs. CVS Health Corp | 70GD vs. Norwegian Air Shuttle | 70GD vs. Air Products Chemicals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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