Correlation Between CVS HEALTH and Manulife Fin
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Manulife Fin 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 Manulife Fin 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 Manulife Fin Non, you can compare the effects of market volatilities on CVS HEALTH and Manulife Fin 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 Manulife Fin. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Manulife Fin.
Diversification Opportunities for CVS HEALTH and Manulife Fin
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVS and Manulife is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Manulife Fin Non in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Fin Non 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 Manulife Fin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Fin Non has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Manulife Fin go up and down completely randomly.
Pair Corralation between CVS HEALTH and Manulife Fin
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 7.28 times more return on investment than Manulife Fin. However, CVS HEALTH is 7.28 times more volatile than Manulife Fin Non. It trades about 0.08 of its potential returns per unit of risk. Manulife Fin Non is currently generating about -0.04 per unit of risk. If you would invest 1,409 in CVS HEALTH CDR on September 1, 2024 and sell it today you would earn a total of 69.00 from holding CVS HEALTH CDR or generate 4.9% 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. Manulife Fin Non
Performance |
| Timeline |
| CVS HEALTH CDR |
| Manulife Fin Non |
CVS HEALTH and Manulife Fin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Manulife Fin
The main advantage of trading using opposite CVS HEALTH and Manulife Fin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Manulife Fin 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 Manulife Fin will offset losses from the drop in Manulife Fin's long position.| CVS HEALTH vs. Extendicare | CVS HEALTH vs. Sienna Senior Living | CVS HEALTH vs. Chemtrade Logistics Income | CVS HEALTH vs. iShares Canadian HYBrid |
| Manulife Fin vs. Leons Furniture Limited | Manulife Fin vs. Advent Wireless | Manulife Fin vs. Perseus Mining | Manulife Fin vs. Plaza Retail REIT |
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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