Correlation Between Coca Cola and CVS Health
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Coca Cola and CVS Health, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and CVS Health.
Diversification Opportunities for Coca Cola and CVS Health
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coca and CVS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Coca Cola 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 The Coca Cola 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 Coca Cola i.e., Coca Cola and CVS Health go up and down completely randomly.
Pair Corralation between Coca Cola and CVS Health
Assuming the 90 days trading horizon The Coca Cola is expected to generate 0.42 times more return on investment than CVS Health. However, The Coca Cola is 2.41 times less risky than CVS Health. It trades about 0.05 of its potential returns per unit of risk. CVS Health is currently generating about -0.01 per unit of risk. If you would invest 5,018 in The Coca Cola on November 2, 2024 and sell it today you would earn a total of 1,262 from holding The Coca Cola or generate 25.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.36% |
| Values | Daily Returns |
The Coca Cola vs. CVS Health
Performance |
| Timeline |
| Coca Cola |
| CVS Health |
Coca Cola and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and CVS Health
The main advantage of trading using opposite Coca Cola and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Sumitomo Mitsui Financial | Coca Cola vs. Datadog, | Coca Cola vs. Fidelity National Information | Coca Cola vs. Charter Communications |
| CVS Health vs. LPL Financial Holdings | CVS Health vs. Verizon Communications | CVS Health vs. Tyson Foods | CVS Health vs. salesforce inc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |