Correlation Between CVS Health and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both CVS Health and Mueller Industries 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 Mueller Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Mueller Industries, you can compare the effects of market volatilities on CVS Health and Mueller Industries 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Mueller Industries.
Diversification Opportunities for CVS Health and Mueller Industries
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Mueller is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries 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 Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of CVS Health i.e., CVS Health and Mueller Industries go up and down completely randomly.
Pair Corralation between CVS Health and Mueller Industries
Assuming the 90 days trading horizon CVS Health is expected to under-perform the Mueller Industries. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health is 1.22 times less risky than Mueller Industries. The stock trades about -0.05 of its potential returns per unit of risk. The Mueller Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,714 in Mueller Industries on September 22, 2024 and sell it today you would earn a total of 4,686 from holding Mueller Industries or generate 172.66% 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. Mueller Industries
Performance |
| Timeline |
| CVS Health |
| Mueller Industries |
CVS Health and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Mueller Industries
The main advantage of trading using opposite CVS Health and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Mueller Industries 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| CVS Health vs. Gol Intelligent Airlines | CVS Health vs. BlueScope Steel Limited | CVS Health vs. RELIANCE STEEL AL | CVS Health vs. American Airlines Group |
| Mueller Industries vs. JSC Halyk bank | Mueller Industries vs. CDN IMPERIAL BANK | Mueller Industries vs. GREENX METALS LTD | Mueller Industries vs. BANKINTER ADR 2007 |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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