Correlation Between CVS Health and Neometals
Can any of the company-specific risk be diversified away by investing in both CVS Health and Neometals 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 Neometals 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 Neometals, you can compare the effects of market volatilities on CVS Health and Neometals 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 Neometals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Neometals.
Diversification Opportunities for CVS Health and Neometals
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and Neometals is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Neometals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals 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 Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals has no effect on the direction of CVS Health i.e., CVS Health and Neometals go up and down completely randomly.
Pair Corralation between CVS Health and Neometals
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 0.51 times more return on investment than Neometals. However, CVS Health Corp is 1.97 times less risky than Neometals. It trades about -0.02 of its potential returns per unit of risk. Neometals is currently generating about -0.04 per unit of risk. If you would invest 7,159 in CVS Health Corp on September 2, 2024 and sell it today you would lose (1,187) from holding CVS Health Corp or give up 16.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Neometals
Performance |
| Timeline |
| CVS Health Corp |
| Neometals |
CVS Health and Neometals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Neometals
The main advantage of trading using opposite CVS Health and Neometals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Neometals 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 Neometals will offset losses from the drop in Neometals' long position.| CVS Health vs. Young Cos Brewery | CVS Health vs. Spirent Communications plc | CVS Health vs. Zoom Video Communications | CVS Health vs. Ecclesiastical Insurance Office |
| Neometals vs. Jacquet Metal Service | Neometals vs. AfriTin Mining | Neometals vs. Norman Broadbent Plc | Neometals vs. Darden Restaurants |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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