Correlation Between CVS Health and X FAB
Can any of the company-specific risk be diversified away by investing in both CVS Health and X FAB 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 X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and X FAB Silicon Foundries, you can compare the effects of market volatilities on CVS Health and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and X FAB.
Diversification Opportunities for CVS Health and X FAB
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and XFB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of CVS Health i.e., CVS Health and X FAB go up and down completely randomly.
Pair Corralation between CVS Health and X FAB
Assuming the 90 days trading horizon CVS Health is expected to generate 0.83 times more return on investment than X FAB. However, CVS Health is 1.21 times less risky than X FAB. It trades about -0.03 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.03 per unit of risk. If you would invest 8,484 in CVS Health on September 5, 2024 and sell it today you would lose (2,825) from holding CVS Health or give up 33.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. X FAB Silicon Foundries
Performance |
| Timeline |
| CVS Health |
| X FAB Silicon |
CVS Health and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and X FAB
The main advantage of trading using opposite CVS Health and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
| X FAB vs. Gladstone Investment | X FAB vs. Genco Shipping Trading | X FAB vs. SEI INVESTMENTS | X FAB vs. ECHO INVESTMENT ZY |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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