Correlation Between CVS Health and Ecclesiastical Insurance
Can any of the company-specific risk be diversified away by investing in both CVS Health and Ecclesiastical Insurance 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 Ecclesiastical Insurance 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 Ecclesiastical Insurance Office, you can compare the effects of market volatilities on CVS Health and Ecclesiastical Insurance 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 Ecclesiastical Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Ecclesiastical Insurance.
Diversification Opportunities for CVS Health and Ecclesiastical Insurance
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Ecclesiastical is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Ecclesiastical Insurance Offic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecclesiastical Insurance 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 Ecclesiastical Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecclesiastical Insurance has no effect on the direction of CVS Health i.e., CVS Health and Ecclesiastical Insurance go up and down completely randomly.
Pair Corralation between CVS Health and Ecclesiastical Insurance
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 3.16 times more return on investment than Ecclesiastical Insurance. However, CVS Health is 3.16 times more volatile than Ecclesiastical Insurance Office. It trades about 0.07 of its potential returns per unit of risk. Ecclesiastical Insurance Office is currently generating about -0.05 per unit of risk. If you would invest 5,737 in CVS Health Corp on August 28, 2024 and sell it today you would earn a total of 264.00 from holding CVS Health Corp or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Ecclesiastical Insurance Offic
Performance |
| Timeline |
| CVS Health Corp |
| Ecclesiastical Insurance |
CVS Health and Ecclesiastical Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Ecclesiastical Insurance
The main advantage of trading using opposite CVS Health and Ecclesiastical Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Ecclesiastical Insurance 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 Ecclesiastical Insurance will offset losses from the drop in Ecclesiastical Insurance'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 |
| Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Hyundai Motor | Ecclesiastical Insurance vs. Toyota Motor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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