Correlation Between Carnegie Clean and CVS Health
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean 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 Carnegie Clean and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnegie Clean Energy and CVS Health, you can compare the effects of market volatilities on Carnegie Clean 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 Carnegie Clean with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and CVS Health.
Diversification Opportunities for Carnegie Clean and CVS Health
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Carnegie and CVS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Carnegie Clean 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 Carnegie Clean Energy 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 Carnegie Clean i.e., Carnegie Clean and CVS Health go up and down completely randomly.
Pair Corralation between Carnegie Clean and CVS Health
Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 1.71 times more return on investment than CVS Health. However, Carnegie Clean is 1.71 times more volatile than CVS Health. It trades about 0.01 of its potential returns per unit of risk. CVS Health is currently generating about -0.07 per unit of risk. If you would invest 2.14 in Carnegie Clean Energy on September 19, 2024 and sell it today you would lose (0.10) from holding Carnegie Clean Energy or give up 4.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carnegie Clean Energy vs. CVS Health
Performance |
| Timeline |
| Carnegie Clean Energy |
| CVS Health |
Carnegie Clean and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnegie Clean and CVS Health
The main advantage of trading using opposite Carnegie Clean and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean 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.| Carnegie Clean vs. Superior Plus Corp | Carnegie Clean vs. SIVERS SEMICONDUCTORS AB | Carnegie Clean vs. Norsk Hydro ASA | Carnegie Clean vs. Reliance Steel Aluminum |
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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