Correlation Between CVS Health and Gelsenwasser
Can any of the company-specific risk be diversified away by investing in both CVS Health and Gelsenwasser 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 Gelsenwasser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Gelsenwasser AG, you can compare the effects of market volatilities on CVS Health and Gelsenwasser 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 Gelsenwasser. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Gelsenwasser.
Diversification Opportunities for CVS Health and Gelsenwasser
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Gelsenwasser is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Gelsenwasser AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelsenwasser 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 Gelsenwasser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelsenwasser AG has no effect on the direction of CVS Health i.e., CVS Health and Gelsenwasser go up and down completely randomly.
Pair Corralation between CVS Health and Gelsenwasser
Assuming the 90 days trading horizon CVS Health is expected to generate 1.26 times more return on investment than Gelsenwasser. However, CVS Health is 1.26 times more volatile than Gelsenwasser AG. It trades about 0.15 of its potential returns per unit of risk. Gelsenwasser AG is currently generating about 0.01 per unit of risk. If you would invest 5,049 in CVS Health on September 4, 2024 and sell it today you would earn a total of 610.00 from holding CVS Health or generate 12.08% 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. Gelsenwasser AG
Performance |
| Timeline |
| CVS Health |
| Gelsenwasser AG |
CVS Health and Gelsenwasser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Gelsenwasser
The main advantage of trading using opposite CVS Health and Gelsenwasser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Gelsenwasser 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 Gelsenwasser will offset losses from the drop in Gelsenwasser's long position.| CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
| Gelsenwasser vs. Bumrungrad Hospital Public | Gelsenwasser vs. CVS Health | Gelsenwasser vs. Brockhaus Capital Management | Gelsenwasser vs. ANTA SPORTS PRODUCT |
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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