Correlation Between CVS HEALTH and Themac Resources
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Themac Resources 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 Themac Resources 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 Themac Resources Group, you can compare the effects of market volatilities on CVS HEALTH and Themac Resources 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 Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Themac Resources.
Diversification Opportunities for CVS HEALTH and Themac Resources
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CVS and Themac is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Themac Resources go up and down completely randomly.
Pair Corralation between CVS HEALTH and Themac Resources
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 0.37 times more return on investment than Themac Resources. However, CVS HEALTH CDR is 2.69 times less risky than Themac Resources. It trades about 0.11 of its potential returns per unit of risk. Themac Resources Group is currently generating about -0.09 per unit of risk. If you would invest 1,367 in CVS HEALTH CDR on September 5, 2024 and sell it today you would earn a total of 108.00 from holding CVS HEALTH CDR or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Themac Resources Group
Performance |
| Timeline |
| CVS HEALTH CDR |
| Themac Resources |
CVS HEALTH and Themac Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Themac Resources
The main advantage of trading using opposite CVS HEALTH and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Themac Resources 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 Themac Resources will offset losses from the drop in Themac Resources' long position.| CVS HEALTH vs. iShares Canadian HYBrid | CVS HEALTH vs. Altagas Cum Red | CVS HEALTH vs. European Residential Real | CVS HEALTH vs. iShares Fundamental Hedged |
| Themac Resources vs. CVS HEALTH CDR | Themac Resources vs. Ramp Metals | Themac Resources vs. Talon Metals Corp | Themac Resources vs. Bausch Health Companies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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