Correlation Between CVS Health and IQVIA Holdings
Can any of the company-specific risk be diversified away by investing in both CVS Health and IQVIA Holdings 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 IQVIA Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and IQVIA Holdings, you can compare the effects of market volatilities on CVS Health and IQVIA Holdings 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 IQVIA Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and IQVIA Holdings.
Diversification Opportunities for CVS Health and IQVIA Holdings
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and IQVIA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings 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 IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of CVS Health i.e., CVS Health and IQVIA Holdings go up and down completely randomly.
Pair Corralation between CVS Health and IQVIA Holdings
Assuming the 90 days trading horizon CVS Health is expected to generate 1.18 times more return on investment than IQVIA Holdings. However, CVS Health is 1.18 times more volatile than IQVIA Holdings. It trades about 0.02 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.02 per unit of risk. If you would invest 5,430 in CVS Health on September 3, 2024 and sell it today you would earn a total of 225.00 from holding CVS Health or generate 4.14% 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. IQVIA Holdings
Performance |
| Timeline |
| CVS Health |
| IQVIA Holdings |
CVS Health and IQVIA Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and IQVIA Holdings
The main advantage of trading using opposite CVS Health and IQVIA Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, IQVIA Holdings 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 IQVIA Holdings will offset losses from the drop in IQVIA Holdings' 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 |
| IQVIA Holdings vs. Thermo Fisher Scientific | IQVIA Holdings vs. Danaher | IQVIA Holdings vs. Danaher | IQVIA Holdings vs. SIEMENS HEALTH ADR050 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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