Correlation Between CVS HEALTH and Amazon CDR
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Amazon CDR 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 Amazon CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS HEALTH CDR and Amazon CDR, you can compare the effects of market volatilities on CVS HEALTH and Amazon CDR 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 Amazon CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Amazon CDR.
Diversification Opportunities for CVS HEALTH and Amazon CDR
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Amazon is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Amazon CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon CDR 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 CDR are associated (or correlated) with Amazon CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon CDR has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Amazon CDR go up and down completely randomly.
Pair Corralation between CVS HEALTH and Amazon CDR
Assuming the 90 days trading horizon CVS HEALTH is expected to generate 5.46 times less return on investment than Amazon CDR. In addition to that, CVS HEALTH is 1.14 times more volatile than Amazon CDR. It trades about 0.01 of its total potential returns per unit of risk. Amazon CDR is currently generating about 0.07 per unit of volatility. If you would invest 2,141 in Amazon CDR on September 1, 2024 and sell it today you would earn a total of 336.00 from holding Amazon CDR or generate 15.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Amazon CDR
Performance |
| Timeline |
| CVS HEALTH CDR |
| Amazon CDR |
CVS HEALTH and Amazon CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Amazon CDR
The main advantage of trading using opposite CVS HEALTH and Amazon CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Amazon CDR 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 Amazon CDR will offset losses from the drop in Amazon CDR's long position.| CVS HEALTH vs. Extendicare | CVS HEALTH vs. Sienna Senior Living | CVS HEALTH vs. Chemtrade Logistics Income | CVS HEALTH vs. iShares Canadian HYBrid |
| Amazon CDR vs. iShares Canadian HYBrid | Amazon CDR vs. Altagas Cum Red | Amazon CDR vs. European Residential Real | Amazon CDR vs. iShares Fundamental Hedged |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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