Correlation Between CVS HEALTH and Brookfield Office
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Brookfield Office 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 Brookfield Office 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 Brookfield Office Properties, you can compare the effects of market volatilities on CVS HEALTH and Brookfield Office 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 Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Brookfield Office.
Diversification Opportunities for CVS HEALTH and Brookfield Office
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Brookfield is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office 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 Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Brookfield Office go up and down completely randomly.
Pair Corralation between CVS HEALTH and Brookfield Office
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 4.57 times more return on investment than Brookfield Office. However, CVS HEALTH is 4.57 times more volatile than Brookfield Office Properties. It trades about 0.09 of its potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.25 per unit of risk. If you would invest 1,391 in CVS HEALTH CDR on September 2, 2024 and sell it today you would earn a total of 87.00 from holding CVS HEALTH CDR or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Brookfield Office Properties
Performance |
| Timeline |
| CVS HEALTH CDR |
| Brookfield Office |
CVS HEALTH and Brookfield Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Brookfield Office
The main advantage of trading using opposite CVS HEALTH and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Brookfield Office 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 Brookfield Office will offset losses from the drop in Brookfield Office's long position.| CVS HEALTH vs. Partners Value Investments | CVS HEALTH vs. Western Investment | CVS HEALTH vs. Canaf Investments | CVS HEALTH vs. Ramp Metals |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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