Correlation Between CVS Group and Garofalo Health
Can any of the company-specific risk be diversified away by investing in both CVS Group and Garofalo 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 CVS Group and Garofalo Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Group plc and Garofalo Health Care, you can compare the effects of market volatilities on CVS Group and Garofalo 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 CVS Group with a short position of Garofalo Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Group and Garofalo Health.
Diversification Opportunities for CVS Group and Garofalo Health
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVS and Garofalo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CVS Group plc and Garofalo Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garofalo Health Care and CVS Group 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 Group plc are associated (or correlated) with Garofalo Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garofalo Health Care has no effect on the direction of CVS Group i.e., CVS Group and Garofalo Health go up and down completely randomly.
Pair Corralation between CVS Group and Garofalo Health
Assuming the 90 days horizon CVS Group plc is expected to under-perform the Garofalo Health. In addition to that, CVS Group is 1.85 times more volatile than Garofalo Health Care. It trades about -0.04 of its total potential returns per unit of risk. Garofalo Health Care is currently generating about 0.05 per unit of volatility. If you would invest 374.00 in Garofalo Health Care on October 25, 2024 and sell it today you would earn a total of 128.00 from holding Garofalo Health Care or generate 34.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CVS Group plc vs. Garofalo Health Care
Performance |
| Timeline |
| CVS Group plc |
| Garofalo Health Care |
CVS Group and Garofalo Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Group and Garofalo Health
The main advantage of trading using opposite CVS Group and Garofalo Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Group position performs unexpectedly, Garofalo 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 Garofalo Health will offset losses from the drop in Garofalo Health's long position.| CVS Group vs. ARISTOCRAT LEISURE | CVS Group vs. PLAYTECH | CVS Group vs. MICRONIC MYDATA | CVS Group vs. INFORMATION SVC GRP |
| Garofalo Health vs. Sonic Healthcare Limited | Garofalo Health vs. Superior Plus Corp | Garofalo Health vs. Origin Agritech | Garofalo Health vs. Identiv |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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