Correlation Between CVS Health and Grupo Carso

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Can any of the company-specific risk be diversified away by investing in both CVS Health and Grupo Carso 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 Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Grupo Carso SAB, you can compare the effects of market volatilities on CVS Health and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Grupo Carso.

Diversification Opportunities for CVS Health and Grupo Carso

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between CVS and Grupo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of CVS Health i.e., CVS Health and Grupo Carso go up and down completely randomly.

Pair Corralation between CVS Health and Grupo Carso

Assuming the 90 days trading horizon CVS Health is expected to under-perform the Grupo Carso. In addition to that, CVS Health is 1.29 times more volatile than Grupo Carso SAB. It trades about -0.4 of its total potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.05 per unit of volatility. If you would invest  11,693  in Grupo Carso SAB on September 18, 2024 and sell it today you would earn a total of  209.00  from holding Grupo Carso SAB or generate 1.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CVS Health  vs.  Grupo Carso SAB

 Performance 
       Timeline  
CVS Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Grupo Carso SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Carso is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CVS Health and Grupo Carso Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CVS Health and Grupo Carso

The main advantage of trading using opposite CVS Health and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.
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The idea behind CVS Health and Grupo Carso SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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