Correlation Between CVS Health and Baring Emerging
Can any of the company-specific risk be diversified away by investing in both CVS Health and Baring Emerging 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 Baring Emerging 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 Baring Emerging Europe, you can compare the effects of market volatilities on CVS Health and Baring Emerging 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 Baring Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Baring Emerging.
Diversification Opportunities for CVS Health and Baring Emerging
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and Baring is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Baring Emerging Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baring Emerging Europe 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 Baring Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baring Emerging Europe has no effect on the direction of CVS Health i.e., CVS Health and Baring Emerging go up and down completely randomly.
Pair Corralation between CVS Health and Baring Emerging
Assuming the 90 days trading horizon CVS Health is expected to generate 7.52 times less return on investment than Baring Emerging. In addition to that, CVS Health is 3.7 times more volatile than Baring Emerging Europe. It trades about 0.02 of its total potential returns per unit of risk. Baring Emerging Europe is currently generating about 0.52 per unit of volatility. If you would invest 55,250 in Baring Emerging Europe on August 24, 2024 and sell it today you would earn a total of 6,750 from holding Baring Emerging Europe or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Baring Emerging Europe
Performance |
| Timeline |
| CVS Health Corp |
| Baring Emerging Europe |
CVS Health and Baring Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Baring Emerging
The main advantage of trading using opposite CVS Health and Baring Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Baring Emerging 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 Baring Emerging will offset losses from the drop in Baring Emerging's long position.| CVS Health vs. Ecclesiastical Insurance Office | CVS Health vs. LPKF Laser Electronics | CVS Health vs. HCA Healthcare | CVS Health vs. Cardinal Health |
| Baring Emerging vs. Sealed Air Corp | Baring Emerging vs. Playtech Plc | Baring Emerging vs. Celebrus Technologies plc | Baring Emerging vs. PureTech Health plc |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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