Correlation Between CVS Health and Takkt AG
Can any of the company-specific risk be diversified away by investing in both CVS Health and Takkt AG 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 Takkt AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Takkt AG, you can compare the effects of market volatilities on CVS Health and Takkt AG 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 Takkt AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Takkt AG.
Diversification Opportunities for CVS Health and Takkt AG
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Takkt is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Takkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takkt AG 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 Takkt AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takkt AG has no effect on the direction of CVS Health i.e., CVS Health and Takkt AG go up and down completely randomly.
Pair Corralation between CVS Health and Takkt AG
Assuming the 90 days trading horizon CVS Health is expected to generate 2.8 times more return on investment than Takkt AG. However, CVS Health is 2.8 times more volatile than Takkt AG. It trades about 0.12 of its potential returns per unit of risk. Takkt AG is currently generating about -0.36 per unit of risk. If you would invest 5,049 in CVS Health on September 5, 2024 and sell it today you would earn a total of 478.00 from holding CVS Health or generate 9.47% 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. Takkt AG
Performance |
Timeline |
CVS Health |
Takkt AG |
CVS Health and Takkt AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Takkt AG
The main advantage of trading using opposite CVS Health and Takkt AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Takkt AG 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 Takkt AG will offset losses from the drop in Takkt AG's long position.CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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