Correlation Between GoldMining and CVS Health
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and CVS Health Corp, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and CVS Health.
Diversification Opportunities for GoldMining and CVS Health
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GoldMining and CVS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and CVS Health go up and down completely randomly.
Pair Corralation between GoldMining and CVS Health
Assuming the 90 days trading horizon GoldMining is expected to under-perform the CVS Health. In addition to that, GoldMining is 1.81 times more volatile than CVS Health Corp. It trades about -0.04 of its total potential returns per unit of risk. CVS Health Corp is currently generating about -0.03 per unit of volatility. If you would invest 8,014 in CVS Health Corp on October 16, 2024 and sell it today you would lose (2,888) from holding CVS Health Corp or give up 36.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
GoldMining vs. CVS Health Corp
Performance |
| Timeline |
| GoldMining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CVS Health Corp |
GoldMining and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and CVS Health
The main advantage of trading using opposite GoldMining and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. Cornish Metals | GoldMining vs. Europa Metals | GoldMining vs. Power Metal Resources | GoldMining vs. Qurate Retail Series |
| CVS Health vs. Hochschild Mining plc | CVS Health vs. GreenX Metals | CVS Health vs. Cornish Metals | CVS Health vs. Thor Mining 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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