Correlation Between CVS Health and National Health
Can any of the company-specific risk be diversified away by investing in both CVS Health and National Health 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 National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and National Health Investors, you can compare the effects of market volatilities on CVS Health and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and National Health.
Diversification Opportunities for CVS Health and National Health
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVS and National is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of CVS Health i.e., CVS Health and National Health go up and down completely randomly.
Pair Corralation between CVS Health and National Health
Assuming the 90 days trading horizon CVS Health is expected to generate 1.5 times more return on investment than National Health. However, CVS Health is 1.5 times more volatile than National Health Investors. It trades about 0.12 of its potential returns per unit of risk. National Health Investors is currently generating about 0.07 per unit of risk. If you would invest 5,194 in CVS Health on September 1, 2024 and sell it today you would earn a total of 461.00 from holding CVS Health or generate 8.88% 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. National Health Investors
Performance |
| Timeline |
| CVS Health |
| National Health Investors |
CVS Health and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and National Health
The main advantage of trading using opposite CVS Health and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health's long position.| CVS Health vs. SIVERS SEMICONDUCTORS AB | CVS Health vs. Darden Restaurants | CVS Health vs. Reliance Steel Aluminum | CVS Health vs. Q2M Managementberatung AG |
| National Health vs. NTG Nordic Transport | National Health vs. Transport International Holdings | National Health vs. EVS Broadcast Equipment | National Health vs. COPLAND ROAD CAPITAL |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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