Correlation Between CVS Health and Nib Holdings
Can any of the company-specific risk be diversified away by investing in both CVS Health and Nib Holdings 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 CVS Health and Nib Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and nib holdings limited, you can compare the effects of market volatilities on CVS Health and Nib Holdings 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 CVS Health with a short position of Nib Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Nib Holdings.
Diversification Opportunities for CVS Health and Nib Holdings
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Nib is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and nib holdings limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nib holdings limited and CVS Health 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 CVS Health are associated (or correlated) with Nib Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nib holdings limited has no effect on the direction of CVS Health i.e., CVS Health and Nib Holdings go up and down completely randomly.
Pair Corralation between CVS Health and Nib Holdings
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Nib Holdings. In addition to that, CVS Health is 1.07 times more volatile than nib holdings limited. It trades about -0.04 of its total potential returns per unit of risk. nib holdings limited is currently generating about -0.02 per unit of volatility. If you would invest 423.00 in nib holdings limited on September 14, 2024 and sell it today you would lose (91.00) from holding nib holdings limited or give up 21.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
CVS Health vs. nib holdings limited
Performance |
| Timeline |
| CVS Health |
| nib holdings limited |
CVS Health and Nib Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Nib Holdings
The main advantage of trading using opposite CVS Health and Nib Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Nib Holdings 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 Nib Holdings will offset losses from the drop in Nib Holdings' long position.The idea behind CVS Health and nib holdings limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nib Holdings vs. CVS Health | Nib Holdings vs. SHIP HEALTHCARE HLDGINC | Nib Holdings vs. EPSILON HEALTHCARE LTD | Nib Holdings vs. ASSOC BR FOODS |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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