Correlation Between Uniper SE and CVS Health
Can any of the company-specific risk be diversified away by investing in both Uniper SE 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 Uniper SE and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uniper SE and CVS Health Corp, you can compare the effects of market volatilities on Uniper SE 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 Uniper SE with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uniper SE and CVS Health.
Diversification Opportunities for Uniper SE and CVS Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Uniper and CVS is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Uniper SE 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 Uniper SE 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 Uniper SE 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 Uniper SE i.e., Uniper SE and CVS Health go up and down completely randomly.
Pair Corralation between Uniper SE and CVS Health
Assuming the 90 days trading horizon Uniper SE is expected to generate 1.87 times more return on investment than CVS Health. However, Uniper SE is 1.87 times more volatile than CVS Health Corp. It trades about 0.0 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.04 per unit of risk. If you would invest 5,976 in Uniper SE on October 15, 2024 and sell it today you would lose (1,629) from holding Uniper SE or give up 27.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Uniper SE vs. CVS Health Corp
Performance |
| Timeline |
| Uniper SE |
| CVS Health Corp |
Uniper SE and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uniper SE and CVS Health
The main advantage of trading using opposite Uniper SE and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uniper SE 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.| Uniper SE vs. Live Nation Entertainment | Uniper SE vs. Cairn Homes PLC | Uniper SE vs. Pets at Home | Uniper SE vs. LBG Media PLC |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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