Correlation Between Caseys General and CVS Health
Can any of the company-specific risk be diversified away by investing in both Caseys General 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 Caseys General and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and CVS Health, you can compare the effects of market volatilities on Caseys General 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 Caseys General with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and CVS Health.
Diversification Opportunities for Caseys General and CVS Health
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Caseys and CVS is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Caseys General 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 Caseys General Stores 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 Caseys General i.e., Caseys General and CVS Health go up and down completely randomly.
Pair Corralation between Caseys General and CVS Health
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.66 times more return on investment than CVS Health. However, Caseys General Stores is 1.51 times less risky than CVS Health. It trades about 0.07 of its potential returns per unit of risk. CVS Health is currently generating about 0.0 per unit of risk. If you would invest 26,410 in Caseys General Stores on December 12, 2024 and sell it today you would earn a total of 9,790 from holding Caseys General Stores or generate 37.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. CVS Health
Performance |
| Timeline |
| Caseys General Stores |
| CVS Health |
Caseys General and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and CVS Health
The main advantage of trading using opposite Caseys General and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General 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.| Caseys General vs. AGRICULTBK HADR25 YC | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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