Correlation Between STELLA JONES and CVS Health
Can any of the company-specific risk be diversified away by investing in both STELLA JONES 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 STELLA JONES and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STELLA JONES INC and CVS Health, you can compare the effects of market volatilities on STELLA JONES 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 STELLA JONES with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of STELLA JONES and CVS Health.
Diversification Opportunities for STELLA JONES and CVS Health
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between STELLA and CVS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding STELLA JONES INC and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and STELLA JONES 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 STELLA JONES INC 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 STELLA JONES i.e., STELLA JONES and CVS Health go up and down completely randomly.
Pair Corralation between STELLA JONES and CVS Health
Assuming the 90 days horizon STELLA JONES INC is expected to generate 1.33 times more return on investment than CVS Health. However, STELLA JONES is 1.33 times more volatile than CVS Health. It trades about 0.07 of its potential returns per unit of risk. CVS Health is currently generating about 0.02 per unit of risk. If you would invest 4,692 in STELLA JONES INC on September 12, 2024 and sell it today you would earn a total of 148.00 from holding STELLA JONES INC or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STELLA JONES INC vs. CVS Health
Performance |
| Timeline |
| STELLA JONES INC |
| CVS Health |
STELLA JONES and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STELLA JONES and CVS Health
The main advantage of trading using opposite STELLA JONES and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STELLA JONES 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.| STELLA JONES vs. Superior Plus Corp | STELLA JONES vs. SIVERS SEMICONDUCTORS AB | STELLA JONES vs. NorAm Drilling AS | STELLA JONES vs. Norsk Hydro ASA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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