Correlation Between CVS Health and Casio Computer
Can any of the company-specific risk be diversified away by investing in both CVS Health and Casio Computer 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 Casio Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Casio Computer CoLtd, you can compare the effects of market volatilities on CVS Health and Casio Computer 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 Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Casio Computer.
Diversification Opportunities for CVS Health and Casio Computer
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Casio is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of CVS Health i.e., CVS Health and Casio Computer go up and down completely randomly.
Pair Corralation between CVS Health and Casio Computer
Assuming the 90 days trading horizon CVS Health is expected to generate 19.22 times less return on investment than Casio Computer. But when comparing it to its historical volatility, CVS Health is 1.04 times less risky than Casio Computer. It trades about 0.02 of its potential returns per unit of risk. Casio Computer CoLtd is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 655.00 in Casio Computer CoLtd on September 12, 2024 and sell it today you would earn a total of 126.00 from holding Casio Computer CoLtd or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Casio Computer CoLtd
Performance |
| Timeline |
| CVS Health |
| Casio Computer CoLtd |
CVS Health and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Casio Computer
The main advantage of trading using opposite CVS Health and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Casio Computer 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 Casio Computer will offset losses from the drop in Casio Computer's long position.The idea behind CVS Health and Casio Computer CoLtd 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.| Casio Computer vs. Samsung Electronics Co | Casio Computer vs. Samsung Electronics Co | Casio Computer vs. Sony Group | Casio Computer vs. Superior Plus Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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