Correlation Between CVS Health and Deltex Medical
Can any of the company-specific risk be diversified away by investing in both CVS Health and Deltex Medical 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 Deltex Medical 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 Deltex Medical Group, you can compare the effects of market volatilities on CVS Health and Deltex Medical 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 Deltex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Deltex Medical.
Diversification Opportunities for CVS Health and Deltex Medical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Deltex is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Deltex Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltex Medical Group 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 Deltex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltex Medical Group has no effect on the direction of CVS Health i.e., CVS Health and Deltex Medical go up and down completely randomly.
Pair Corralation between CVS Health and Deltex Medical
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 0.41 times more return on investment than Deltex Medical. However, CVS Health Corp is 2.46 times less risky than Deltex Medical. It trades about -0.02 of its potential returns per unit of risk. Deltex Medical Group is currently generating about -0.09 per unit of risk. If you would invest 7,918 in CVS Health Corp on October 26, 2024 and sell it today you would lose (2,463) from holding CVS Health Corp or give up 31.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.97% |
| Values | Daily Returns |
CVS Health Corp vs. Deltex Medical Group
Performance |
| Timeline |
| CVS Health Corp |
| Deltex Medical Group |
CVS Health and Deltex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Deltex Medical
The main advantage of trading using opposite CVS Health and Deltex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Deltex Medical 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 Deltex Medical will offset losses from the drop in Deltex Medical's long position.| CVS Health vs. Baker Steel Resources | CVS Health vs. Veolia Environnement VE | CVS Health vs. Charter Communications Cl | CVS Health vs. United States Steel |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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