Correlation Between CVS HEALTH and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Medical Facilities 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 Medical Facilities 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 Medical Facilities, you can compare the effects of market volatilities on CVS HEALTH and Medical Facilities 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 Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Medical Facilities.
Diversification Opportunities for CVS HEALTH and Medical Facilities
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CVS and Medical is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities 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 Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Medical Facilities go up and down completely randomly.
Pair Corralation between CVS HEALTH and Medical Facilities
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 2.85 times more return on investment than Medical Facilities. However, CVS HEALTH is 2.85 times more volatile than Medical Facilities. It trades about 0.25 of its potential returns per unit of risk. Medical Facilities is currently generating about -0.02 per unit of risk. If you would invest 1,339 in CVS HEALTH CDR on December 11, 2024 and sell it today you would earn a total of 268.00 from holding CVS HEALTH CDR or generate 20.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Medical Facilities
Performance |
| Timeline |
| CVS HEALTH CDR |
| Medical Facilities |
CVS HEALTH and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Medical Facilities
The main advantage of trading using opposite CVS HEALTH and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| CVS HEALTH vs. High Liner Foods | CVS HEALTH vs. Jamieson Wellness | CVS HEALTH vs. NorthWest Healthcare Properties | CVS HEALTH vs. XXIX Metal Corp |
| Medical Facilities vs. Extendicare | Medical Facilities vs. Sienna Senior Living | Medical Facilities vs. Rogers Sugar | Medical Facilities vs. Chemtrade Logistics Income |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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