Correlation Between CVS Health and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both CVS Health and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and The Goldman Sachs, you can compare the effects of market volatilities on CVS Health and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Goldman Sachs.
Diversification Opportunities for CVS Health and Goldman Sachs
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVS and Goldman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of CVS Health i.e., CVS Health and Goldman Sachs go up and down completely randomly.
Pair Corralation between CVS Health and Goldman Sachs
Assuming the 90 days trading horizon CVS Health is expected to generate 1.4 times more return on investment than Goldman Sachs. However, CVS Health is 1.4 times more volatile than The Goldman Sachs. It trades about 0.55 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.31 per unit of risk. If you would invest 90,654 in CVS Health on November 3, 2024 and sell it today you would earn a total of 26,546 from holding CVS Health or generate 29.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. The Goldman Sachs
Performance |
| Timeline |
| CVS Health |
| Goldman Sachs |
CVS Health and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Goldman Sachs
The main advantage of trading using opposite CVS Health and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| CVS Health vs. Lloyds Banking Group | CVS Health vs. Delta Air Lines | CVS Health vs. Southern Copper | CVS Health vs. GMxico Transportes SAB |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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