Correlation Between CVS HEALTH and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Perseus Mining 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 Perseus Mining 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 Perseus Mining, you can compare the effects of market volatilities on CVS HEALTH and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Perseus Mining.
Diversification Opportunities for CVS HEALTH and Perseus Mining
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CVS and Perseus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Perseus Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Perseus Mining go up and down completely randomly.
Pair Corralation between CVS HEALTH and Perseus Mining
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 1.72 times more return on investment than Perseus Mining. However, CVS HEALTH is 1.72 times more volatile than Perseus Mining. It trades about 0.08 of its potential returns per unit of risk. Perseus Mining is currently generating about -0.18 per unit of risk. If you would invest 1,406 in CVS HEALTH CDR on August 31, 2024 and sell it today you would earn a total of 73.00 from holding CVS HEALTH CDR or generate 5.19% 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. Perseus Mining
Performance |
| Timeline |
| CVS HEALTH CDR |
| Perseus Mining |
CVS HEALTH and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Perseus Mining
The main advantage of trading using opposite CVS HEALTH and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| CVS HEALTH vs. iShares Canadian HYBrid | CVS HEALTH vs. Brompton European Dividend | CVS HEALTH vs. Solar Alliance Energy | CVS HEALTH vs. PHN Multi Style All Cap |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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