Correlation Between Apple and CVS Group
Can any of the company-specific risk be diversified away by investing in both Apple and CVS Group 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 Apple and CVS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CVS Group plc, you can compare the effects of market volatilities on Apple and CVS Group 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 Apple with a short position of CVS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CVS Group.
Diversification Opportunities for Apple and CVS Group
Pay attention - limited upside
The 3 months correlation between Apple and CVS is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CVS Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Group plc and Apple 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 Apple Inc are associated (or correlated) with CVS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Group plc has no effect on the direction of Apple i.e., Apple and CVS Group go up and down completely randomly.
Pair Corralation between Apple and CVS Group
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.56 times more return on investment than CVS Group. However, Apple Inc is 1.8 times less risky than CVS Group. It trades about 0.08 of its potential returns per unit of risk. CVS Group plc is currently generating about -0.05 per unit of risk. If you would invest 13,104 in Apple Inc on September 5, 2024 and sell it today you would earn a total of 9,856 from holding Apple Inc or generate 75.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Apple Inc vs. CVS Group plc
Performance |
| Timeline |
| Apple Inc |
| CVS Group plc |
Apple and CVS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CVS Group
The main advantage of trading using opposite Apple and CVS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CVS Group 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 Group will offset losses from the drop in CVS Group's long position.| Apple vs. FIREWEED METALS P | Apple vs. Cal Maine Foods | Apple vs. Park Hotels Resorts | Apple vs. Thai Beverage Public |
| CVS Group vs. Ribbon Communications | CVS Group vs. SK TELECOM TDADR | CVS Group vs. Charter Communications | CVS Group vs. Gamma Communications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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