Correlation Between Dassault Aviation and CVS Health
Can any of the company-specific risk be diversified away by investing in both Dassault Aviation and CVS Health 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 Dassault Aviation and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Aviation SA and CVS Health Corp, you can compare the effects of market volatilities on Dassault Aviation and CVS Health 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 Dassault Aviation with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Aviation and CVS Health.
Diversification Opportunities for Dassault Aviation and CVS Health
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dassault and CVS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Dassault Aviation 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 Dassault Aviation SA are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and CVS Health go up and down completely randomly.
Pair Corralation between Dassault Aviation and CVS Health
Assuming the 90 days trading horizon Dassault Aviation SA is expected to generate 0.67 times more return on investment than CVS Health. However, Dassault Aviation SA is 1.49 times less risky than CVS Health. It trades about 0.02 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.01 per unit of risk. If you would invest 17,943 in Dassault Aviation SA on September 1, 2024 and sell it today you would earn a total of 827.00 from holding Dassault Aviation SA or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.91% |
| Values | Daily Returns |
Dassault Aviation SA vs. CVS Health Corp
Performance |
| Timeline |
| Dassault Aviation |
| CVS Health Corp |
Dassault Aviation and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Aviation and CVS Health
The main advantage of trading using opposite Dassault Aviation and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Aviation position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Dassault Aviation vs. Uniper SE | Dassault Aviation vs. Mulberry Group PLC | Dassault Aviation vs. London Security Plc | Dassault Aviation vs. Triad Group PLC |
| CVS Health vs. Verizon Communications | CVS Health vs. Gamma Communications PLC | CVS Health vs. Aeorema Communications Plc | CVS Health vs. PureTech Health 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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