Correlation Between CVS Health and Apple
Can any of the company-specific risk be diversified away by investing in both CVS Health and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and Apple Inc, you can compare the effects of market volatilities on CVS Health and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Apple.
Diversification Opportunities for CVS Health and Apple
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVS and Apple is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Corp are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CVS Health i.e., CVS Health and Apple go up and down completely randomly.
Pair Corralation between CVS Health and Apple
Considering the 90-day investment horizon CVS Health Corp is expected to generate 3.51 times more return on investment than Apple. However, CVS Health is 3.51 times more volatile than Apple Inc. It trades about 0.06 of its potential returns per unit of risk. Apple Inc is currently generating about 0.0 per unit of risk. If you would invest 5,612 in CVS Health Corp on August 25, 2024 and sell it today you would earn a total of 189.00 from holding CVS Health Corp or generate 3.37% 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 Corp vs. Apple Inc
Performance |
| Timeline |
| CVS Health Corp |
| Apple Inc |
CVS Health and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Apple
The main advantage of trading using opposite CVS Health and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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