Correlation Between CVS Health and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both CVS Health and Hochschild Mining 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 Hochschild Mining 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 Hochschild Mining plc, you can compare the effects of market volatilities on CVS Health and Hochschild Mining 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 Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Hochschild Mining.
Diversification Opportunities for CVS Health and Hochschild Mining
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Hochschild is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc 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 Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of CVS Health i.e., CVS Health and Hochschild Mining go up and down completely randomly.
Pair Corralation between CVS Health and Hochschild Mining
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 1.39 times more return on investment than Hochschild Mining. However, CVS Health is 1.39 times more volatile than Hochschild Mining plc. It trades about 0.07 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about -0.17 per unit of risk. If you would invest 5,737 in CVS Health Corp on August 27, 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. Hochschild Mining plc
Performance |
| Timeline |
| CVS Health Corp |
| Hochschild Mining plc |
CVS Health and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Hochschild Mining
The main advantage of trading using opposite CVS Health and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining'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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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