Correlation Between CVS Health and Axogen
Can any of the company-specific risk be diversified away by investing in both CVS Health and Axogen 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 Axogen 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 Axogen Inc, you can compare the effects of market volatilities on CVS Health and Axogen 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 Axogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Axogen.
Diversification Opportunities for CVS Health and Axogen
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Axogen is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen 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 Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of CVS Health i.e., CVS Health and Axogen go up and down completely randomly.
Pair Corralation between CVS Health and Axogen
Considering the 90-day investment horizon CVS Health is expected to generate 1.11 times less return on investment than Axogen. But when comparing it to its historical volatility, CVS Health Corp is 2.07 times less risky than Axogen. It trades about 0.41 of its potential returns per unit of risk. Axogen Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,527 in Axogen Inc on November 9, 2024 and sell it today you would earn a total of 306.00 from holding Axogen Inc or generate 20.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Axogen Inc
Performance |
| Timeline |
| CVS Health Corp |
| Axogen Inc |
CVS Health and Axogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Axogen
The main advantage of trading using opposite CVS Health and Axogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Axogen 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 Axogen will offset losses from the drop in Axogen'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 Transaction History module to view history of all your transactions and understand their impact on performance.
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