Correlation Between CVS Health and FibraHotel
Can any of the company-specific risk be diversified away by investing in both CVS Health and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and FibraHotel, you can compare the effects of market volatilities on CVS Health and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and FibraHotel.
Diversification Opportunities for CVS Health and FibraHotel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and FibraHotel is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of CVS Health i.e., CVS Health and FibraHotel go up and down completely randomly.
Pair Corralation between CVS Health and FibraHotel
Assuming the 90 days trading horizon CVS Health is expected to generate 1.69 times less return on investment than FibraHotel. In addition to that, CVS Health is 1.15 times more volatile than FibraHotel. It trades about 0.1 of its total potential returns per unit of risk. FibraHotel is currently generating about 0.2 per unit of volatility. If you would invest 789.00 in FibraHotel on August 28, 2024 and sell it today you would earn a total of 92.00 from holding FibraHotel or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. FibraHotel
Performance |
| Timeline |
| CVS Health |
| FibraHotel |
CVS Health and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and FibraHotel
The main advantage of trading using opposite CVS Health and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| CVS Health vs. Glencore plc | CVS Health vs. iShares Trust | CVS Health vs. US Bancorp | CVS Health vs. American Express |
| FibraHotel vs. Promotora y Operadora | FibraHotel vs. Megacable Holdings S | FibraHotel vs. ALPEK SAB de | FibraHotel vs. Gentera SAB de |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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