Correlation Between CVS Health and Allianz SE
Can any of the company-specific risk be diversified away by investing in both CVS Health and Allianz SE 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 Allianz SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Allianz SE VNA, you can compare the effects of market volatilities on CVS Health and Allianz SE 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 Allianz SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Allianz SE.
Diversification Opportunities for CVS Health and Allianz SE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Allianz is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Allianz SE VNA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianz SE VNA 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 Allianz SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianz SE VNA has no effect on the direction of CVS Health i.e., CVS Health and Allianz SE go up and down completely randomly.
Pair Corralation between CVS Health and Allianz SE
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Allianz SE. In addition to that, CVS Health is 2.0 times more volatile than Allianz SE VNA. It trades about -0.03 of its total potential returns per unit of risk. Allianz SE VNA is currently generating about 0.1 per unit of volatility. If you would invest 18,502 in Allianz SE VNA on September 3, 2024 and sell it today you would earn a total of 10,718 from holding Allianz SE VNA or generate 57.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Allianz SE VNA
Performance |
| Timeline |
| CVS Health |
| Allianz SE VNA |
CVS Health and Allianz SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Allianz SE
The main advantage of trading using opposite CVS Health and Allianz SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Allianz SE 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 Allianz SE will offset losses from the drop in Allianz SE's long position.| CVS Health vs. GFL ENVIRONM | CVS Health vs. Reliance Steel Aluminum | CVS Health vs. Chunghwa Telecom Co | CVS Health vs. BlueScope Steel Limited |
| Allianz SE vs. UNIVMUSIC GRPADR050 | Allianz SE vs. CeoTronics AG | Allianz SE vs. CVS Health | Allianz SE vs. Warner Music Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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