Correlation Between CVS HEALTH and Jamieson Wellness
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Jamieson Wellness 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 Jamieson Wellness 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 Jamieson Wellness, you can compare the effects of market volatilities on CVS HEALTH and Jamieson Wellness 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 Jamieson Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Jamieson Wellness.
Diversification Opportunities for CVS HEALTH and Jamieson Wellness
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and Jamieson is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness 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 Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Jamieson Wellness go up and down completely randomly.
Pair Corralation between CVS HEALTH and Jamieson Wellness
Assuming the 90 days trading horizon CVS HEALTH is expected to generate 1.53 times less return on investment than Jamieson Wellness. In addition to that, CVS HEALTH is 1.97 times more volatile than Jamieson Wellness. It trades about 0.08 of its total potential returns per unit of risk. Jamieson Wellness is currently generating about 0.23 per unit of volatility. If you would invest 3,317 in Jamieson Wellness on September 1, 2024 and sell it today you would earn a total of 311.00 from holding Jamieson Wellness or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Jamieson Wellness
Performance |
| Timeline |
| CVS HEALTH CDR |
| Jamieson Wellness |
CVS HEALTH and Jamieson Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Jamieson Wellness
The main advantage of trading using opposite CVS HEALTH and Jamieson Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Jamieson Wellness 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 Jamieson Wellness will offset losses from the drop in Jamieson Wellness' long position.| CVS HEALTH vs. Extendicare | CVS HEALTH vs. Sienna Senior Living | CVS HEALTH vs. Chemtrade Logistics Income | CVS HEALTH vs. iShares Canadian HYBrid |
| Jamieson Wellness vs. Enghouse Systems | Jamieson Wellness vs. Kinaxis | Jamieson Wellness vs. Waste Connections | Jamieson Wellness vs. Open Text 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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