Correlation Between CVS Health and Air Transport
Can any of the company-specific risk be diversified away by investing in both CVS Health and Air Transport 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 Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Air Transport Services, you can compare the effects of market volatilities on CVS Health and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Air Transport.
Diversification Opportunities for CVS Health and Air Transport
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Air is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of CVS Health i.e., CVS Health and Air Transport go up and down completely randomly.
Pair Corralation between CVS Health and Air Transport
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Air Transport. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health is 1.53 times less risky than Air Transport. The stock trades about -0.03 of its potential returns per unit of risk. The Air Transport Services is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,620 in Air Transport Services on September 3, 2024 and sell it today you would lose (540.00) from holding Air Transport Services or give up 20.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Air Transport Services
Performance |
| Timeline |
| CVS Health |
| Air Transport Services |
CVS Health and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Air Transport
The main advantage of trading using opposite CVS Health and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport'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 |
| Air Transport vs. Computershare Limited | Air Transport vs. Ribbon Communications | Air Transport vs. Axcelis Technologies | Air Transport vs. Playtech plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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