Correlation Between Gaming and CVS Health
Can any of the company-specific risk be diversified away by investing in both Gaming 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 Gaming and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming and Leisure and CVS Health, you can compare the effects of market volatilities on Gaming 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 Gaming with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming and CVS Health.
Diversification Opportunities for Gaming and CVS Health
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gaming and CVS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gaming and Leisure and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Gaming 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 Gaming and Leisure 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 has no effect on the direction of Gaming i.e., Gaming and CVS Health go up and down completely randomly.
Pair Corralation between Gaming and CVS Health
Assuming the 90 days horizon Gaming and Leisure is expected to generate 0.42 times more return on investment than CVS Health. However, Gaming and Leisure is 2.39 times less risky than CVS Health. It trades about 0.2 of its potential returns per unit of risk. CVS Health is currently generating about -0.04 per unit of risk. If you would invest 4,534 in Gaming and Leisure on September 13, 2024 and sell it today you would earn a total of 182.00 from holding Gaming and Leisure or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming and Leisure vs. CVS Health
Performance |
| Timeline |
| Gaming and Leisure |
| CVS Health |
Gaming and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming and CVS Health
The main advantage of trading using opposite Gaming and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming 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.| Gaming vs. Zoom Video Communications | Gaming vs. Verizon Communications | Gaming vs. SBA Communications Corp | Gaming vs. Chunghwa Telecom Co |
| CVS Health vs. STRAYER EDUCATION | CVS Health vs. LPKF Laser Electronics | CVS Health vs. Renesas Electronics | CVS Health vs. NorAm Drilling AS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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