Correlation Between CVS Health and Pfizer
Can any of the company-specific risk be diversified away by investing in both CVS Health and Pfizer 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 Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Pfizer Inc, you can compare the effects of market volatilities on CVS Health and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Pfizer.
Diversification Opportunities for CVS Health and Pfizer
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CVS and Pfizer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of CVS Health i.e., CVS Health and Pfizer go up and down completely randomly.
Pair Corralation between CVS Health and Pfizer
Assuming the 90 days trading horizon CVS Health is expected to generate 2.06 times more return on investment than Pfizer. However, CVS Health is 2.06 times more volatile than Pfizer Inc. It trades about 0.13 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.12 per unit of risk. If you would invest 111,000 in CVS Health on September 4, 2024 and sell it today you would earn a total of 9,600 from holding CVS Health or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Pfizer Inc
Performance |
| Timeline |
| CVS Health |
| Pfizer Inc |
CVS Health and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Pfizer
The main advantage of trading using opposite CVS Health and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| CVS Health vs. Samsung Electronics Co | CVS Health vs. First Republic Bank | CVS Health vs. Verizon Communications | CVS Health vs. First Majestic Silver |
| Pfizer vs. The Bank of | Pfizer vs. UnitedHealth Group Incorporated | Pfizer vs. Capital One Financial | Pfizer vs. Cognizant Technology Solutions |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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