Correlation Between CVS Health and AOYAMA TRADING
Can any of the company-specific risk be diversified away by investing in both CVS Health and AOYAMA TRADING 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 AOYAMA TRADING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and AOYAMA TRADING, you can compare the effects of market volatilities on CVS Health and AOYAMA TRADING 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 AOYAMA TRADING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and AOYAMA TRADING.
Diversification Opportunities for CVS Health and AOYAMA TRADING
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and AOYAMA is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and AOYAMA TRADING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOYAMA TRADING 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 AOYAMA TRADING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOYAMA TRADING has no effect on the direction of CVS Health i.e., CVS Health and AOYAMA TRADING go up and down completely randomly.
Pair Corralation between CVS Health and AOYAMA TRADING
Assuming the 90 days trading horizon CVS Health is expected to generate 1.56 times more return on investment than AOYAMA TRADING. However, CVS Health is 1.56 times more volatile than AOYAMA TRADING. It trades about 0.55 of its potential returns per unit of risk. AOYAMA TRADING is currently generating about -0.04 per unit of risk. If you would invest 4,289 in CVS Health on November 3, 2024 and sell it today you would earn a total of 1,182 from holding CVS Health or generate 27.56% 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. AOYAMA TRADING
Performance |
| Timeline |
| CVS Health |
| AOYAMA TRADING |
CVS Health and AOYAMA TRADING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and AOYAMA TRADING
The main advantage of trading using opposite CVS Health and AOYAMA TRADING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, AOYAMA TRADING 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 AOYAMA TRADING will offset losses from the drop in AOYAMA TRADING's long position.| CVS Health vs. Taiwan Semiconductor Manufacturing | CVS Health vs. Thai Beverage Public | CVS Health vs. United Breweries Co | CVS Health vs. NXP Semiconductors NV |
| AOYAMA TRADING vs. Iridium Communications | AOYAMA TRADING vs. Geely Automobile Holdings | AOYAMA TRADING vs. Ribbon Communications | AOYAMA TRADING vs. Cogent Communications Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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