Correlation Between CVS Health and Electrica
Can any of the company-specific risk be diversified away by investing in both CVS Health and Electrica 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 Electrica 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 Electrica SA, you can compare the effects of market volatilities on CVS Health and Electrica 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 Electrica. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Electrica.
Diversification Opportunities for CVS Health and Electrica
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Electrica is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Electrica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrica SA 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 Electrica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrica SA has no effect on the direction of CVS Health i.e., CVS Health and Electrica go up and down completely randomly.
Pair Corralation between CVS Health and Electrica
If you would invest 1,300 in Electrica SA on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Electrica SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Electrica SA
Performance |
| Timeline |
| CVS Health Corp |
| Electrica SA |
CVS Health and Electrica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Electrica
The main advantage of trading using opposite CVS Health and Electrica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Electrica 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 Electrica will offset losses from the drop in Electrica's long position.| CVS Health vs. Cars Inc | CVS Health vs. Zegona Communications Plc | CVS Health vs. Solstad Offshore ASA | CVS Health vs. Iron Mountain |
| Electrica vs. Darden Restaurants | Electrica vs. CVS Health Corp | Electrica vs. Various Eateries PLC | Electrica vs. Fulcrum Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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