Correlation Between CVS Health and Smarttech247 Group
Can any of the company-specific risk be diversified away by investing in both CVS Health and Smarttech247 Group 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 Smarttech247 Group 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 Smarttech247 Group PLC, you can compare the effects of market volatilities on CVS Health and Smarttech247 Group 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 Smarttech247 Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Smarttech247 Group.
Diversification Opportunities for CVS Health and Smarttech247 Group
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Smarttech247 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Smarttech247 Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smarttech247 Group 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 Smarttech247 Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smarttech247 Group PLC has no effect on the direction of CVS Health i.e., CVS Health and Smarttech247 Group go up and down completely randomly.
Pair Corralation between CVS Health and Smarttech247 Group
Assuming the 90 days trading horizon CVS Health Corp is expected to generate 0.45 times more return on investment than Smarttech247 Group. However, CVS Health Corp is 2.22 times less risky than Smarttech247 Group. It trades about 0.46 of its potential returns per unit of risk. Smarttech247 Group PLC is currently generating about -0.1 per unit of risk. If you would invest 4,563 in CVS Health Corp on November 7, 2024 and sell it today you would earn a total of 1,059 from holding CVS Health Corp or generate 23.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CVS Health Corp vs. Smarttech247 Group PLC
Performance |
| Timeline |
| CVS Health Corp |
| Smarttech247 Group PLC |
CVS Health and Smarttech247 Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Smarttech247 Group
The main advantage of trading using opposite CVS Health and Smarttech247 Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Smarttech247 Group 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 Smarttech247 Group will offset losses from the drop in Smarttech247 Group's long position.| CVS Health vs. Empire Metals Limited | CVS Health vs. Endeavour Mining Corp | CVS Health vs. Vulcan Materials Co | CVS Health vs. Applied Materials |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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