Correlation Between CVS HEALTH and Enerflex
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Enerflex 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 Enerflex 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 Enerflex, you can compare the effects of market volatilities on CVS HEALTH and Enerflex 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 Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Enerflex.
Diversification Opportunities for CVS HEALTH and Enerflex
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CVS and Enerflex is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex 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 Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Enerflex go up and down completely randomly.
Pair Corralation between CVS HEALTH and Enerflex
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to under-perform the Enerflex. In addition to that, CVS HEALTH is 1.86 times more volatile than Enerflex. It trades about -0.33 of its total potential returns per unit of risk. Enerflex is currently generating about 0.45 per unit of volatility. If you would invest 1,301 in Enerflex on October 7, 2024 and sell it today you would earn a total of 182.00 from holding Enerflex or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Enerflex
Performance |
| Timeline |
| CVS HEALTH CDR |
| Enerflex |
CVS HEALTH and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Enerflex
The main advantage of trading using opposite CVS HEALTH and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Enerflex 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 Enerflex will offset losses from the drop in Enerflex's long position.| CVS HEALTH vs. Gamehost | CVS HEALTH vs. Major Drilling Group | CVS HEALTH vs. Mako Mining Corp | CVS HEALTH vs. Orbit Garant Drilling |
| Enerflex vs. NeXGold Mining Corp | Enerflex vs. Algonquin Power Utilities | Enerflex vs. Vizsla Silver Corp | Enerflex vs. Caribbean Utilities |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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