Correlation Between CVS HEALTH and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Wilmington Capital 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 Wilmington Capital 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 Wilmington Capital Management, you can compare the effects of market volatilities on CVS HEALTH and Wilmington Capital 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 Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Wilmington Capital.
Diversification Opportunities for CVS HEALTH and Wilmington Capital
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Wilmington is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Wilmington Capital go up and down completely randomly.
Pair Corralation between CVS HEALTH and Wilmington Capital
Assuming the 90 days trading horizon CVS HEALTH CDR is expected to generate 1.46 times more return on investment than Wilmington Capital. However, CVS HEALTH is 1.46 times more volatile than Wilmington Capital Management. It trades about 0.11 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.21 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 Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CVS HEALTH CDR vs. Wilmington Capital Management
Performance |
| Timeline |
| CVS HEALTH CDR |
| Wilmington Capital |
CVS HEALTH and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS HEALTH and Wilmington Capital
The main advantage of trading using opposite CVS HEALTH and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital's 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 |
| Wilmington Capital vs. Perseus Mining | Wilmington Capital vs. Advent Wireless | Wilmington Capital vs. Dream Industrial Real | Wilmington Capital vs. CVS HEALTH CDR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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