Correlation Between CVS Health and Visa
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By analyzing existing cross correlation between CVS Health and Visa Inc, you can compare the effects of market volatilities on CVS Health and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Visa.
Diversification Opportunities for CVS Health and Visa
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Visa is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of CVS Health i.e., CVS Health and Visa go up and down completely randomly.
Pair Corralation between CVS Health and Visa
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Visa. In addition to that, CVS Health is 1.89 times more volatile than Visa Inc. It trades about -0.04 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.09 per unit of volatility. If you would invest 19,021 in Visa Inc on September 14, 2024 and sell it today you would earn a total of 11,019 from holding Visa Inc or generate 57.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Visa Inc
Performance |
| Timeline |
| CVS Health |
| Visa Inc |
CVS Health and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Visa
The main advantage of trading using opposite CVS Health and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.The idea behind CVS Health and Visa Inc 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.| Visa vs. FEMALE HEALTH | Visa vs. Bausch Health Companies | Visa vs. CVS Health | Visa vs. TITANIUM TRANSPORTGROUP |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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