Correlation Between Cable One and CVS Health
Can any of the company-specific risk be diversified away by investing in both Cable One 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 Cable One and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and CVS Health, you can compare the effects of market volatilities on Cable One 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 Cable One with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and CVS Health.
Diversification Opportunities for Cable One and CVS Health
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cable and CVS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Cable One 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 Cable One 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 Cable One i.e., Cable One and CVS Health go up and down completely randomly.
Pair Corralation between Cable One and CVS Health
Assuming the 90 days trading horizon Cable One is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 2.4 times less risky than CVS Health. The stock trades about -0.24 of its potential returns per unit of risk. The CVS Health is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,732 in CVS Health on October 25, 2024 and sell it today you would earn a total of 421.00 from holding CVS Health or generate 15.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. CVS Health
Performance |
| Timeline |
| Cable One |
| CVS Health |
Cable One and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and CVS Health
The main advantage of trading using opposite Cable One and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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.| Cable One vs. United Natural Foods, | Cable One vs. Fresenius Medical Care | Cable One vs. DENTSPLY SIRONA | Cable One vs. Broadcom |
| CVS Health vs. JB Hunt Transport | CVS Health vs. Brpr Corporate Offices | CVS Health vs. Guidewire Software, | CVS Health vs. Datadog, |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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