Correlation Between CVS Health and Granite Construction
Can any of the company-specific risk be diversified away by investing in both CVS Health and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Granite Construction, you can compare the effects of market volatilities on CVS Health and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Granite Construction.
Diversification Opportunities for CVS Health and Granite Construction
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVS and Granite is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of CVS Health i.e., CVS Health and Granite Construction go up and down completely randomly.
Pair Corralation between CVS Health and Granite Construction
Assuming the 90 days trading horizon CVS Health is expected to generate 1.0 times more return on investment than Granite Construction. However, CVS Health is 1.0 times more volatile than Granite Construction. It trades about 0.56 of its potential returns per unit of risk. Granite Construction is currently generating about -0.05 per unit of risk. If you would invest 4,349 in CVS Health on November 6, 2024 and sell it today you would earn a total of 1,122 from holding CVS Health or generate 25.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Granite Construction
Performance |
| Timeline |
| CVS Health |
| Granite Construction |
CVS Health and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Granite Construction
The main advantage of trading using opposite CVS Health and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| CVS Health vs. United States Steel | CVS Health vs. National Retail Properties | CVS Health vs. PT Steel Pipe | CVS Health vs. KOBE STEEL LTD |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |