Correlation Between CVS Health and United States
Can any of the company-specific risk be diversified away by investing in both CVS Health and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and United States Steel, you can compare the effects of market volatilities on CVS Health and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and United States.
Diversification Opportunities for CVS Health and United States
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and United is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of CVS Health i.e., CVS Health and United States go up and down completely randomly.
Pair Corralation between CVS Health and United States
Assuming the 90 days trading horizon CVS Health is expected to generate 0.92 times more return on investment than United States. However, CVS Health is 1.09 times less risky than United States. It trades about 0.13 of its potential returns per unit of risk. United States Steel is currently generating about 0.06 per unit of risk. If you would invest 114,100 in CVS Health on August 31, 2024 and sell it today you would earn a total of 9,410 from holding CVS Health or generate 8.25% 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. United States Steel
Performance |
| Timeline |
| CVS Health |
| United States Steel |
CVS Health and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and United States
The main advantage of trading using opposite CVS Health and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| CVS Health vs. The Select Sector | CVS Health vs. Promotora y Operadora | CVS Health vs. SPDR Series Trust | CVS Health vs. iShares Trust |
| United States vs. Delta Air Lines | United States vs. Grupo Carso SAB | United States vs. McEwen Mining | United States vs. Monster Beverage Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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