Correlation Between CVS Health and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both CVS Health and Grupo Sports 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 Sports 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 Sports World, you can compare the effects of market volatilities on CVS Health and Grupo Sports 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 Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Grupo Sports.
Diversification Opportunities for CVS Health and Grupo Sports
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Grupo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of CVS Health i.e., CVS Health and Grupo Sports go up and down completely randomly.
Pair Corralation between CVS Health and Grupo Sports
Assuming the 90 days trading horizon CVS Health is expected to generate 1.15 times more return on investment than Grupo Sports. However, CVS Health is 1.15 times more volatile than Grupo Sports World. It trades about 0.06 of its potential returns per unit of risk. Grupo Sports World is currently generating about 0.06 per unit of risk. If you would invest 112,600 in CVS Health on August 24, 2024 and sell it today you would earn a total of 3,800 from holding CVS Health or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. Grupo Sports World
Performance |
| Timeline |
| CVS Health |
| Grupo Sports World |
CVS Health and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Grupo Sports
The main advantage of trading using opposite CVS Health and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Grupo Sports 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 Sports will offset losses from the drop in Grupo Sports' long position.| CVS Health vs. Micron Technology | CVS Health vs. Delta Air Lines | CVS Health vs. McEwen Mining | CVS Health vs. Costco Wholesale |
| Grupo Sports vs. GMxico Transportes SAB | Grupo Sports vs. Taiwan Semiconductor Manufacturing | Grupo Sports vs. Monster Beverage Corp | Grupo Sports vs. DXC Technology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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