Correlation Between CVS Health and Citigroup
Can any of the company-specific risk be diversified away by investing in both CVS Health and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on CVS Health and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Citigroup.
Diversification Opportunities for CVS Health and Citigroup
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Citigroup is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of CVS Health i.e., CVS Health and Citigroup go up and down completely randomly.
Pair Corralation between CVS Health and Citigroup
Considering the 90-day investment horizon CVS Health Corp is expected to generate 1.08 times more return on investment than Citigroup. However, CVS Health is 1.08 times more volatile than Citigroup. It trades about 0.7 of its potential returns per unit of risk. Citigroup is currently generating about 0.45 per unit of risk. If you would invest 4,367 in CVS Health Corp on November 2, 2024 and sell it today you would earn a total of 1,323 from holding CVS Health Corp or generate 30.3% 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. Citigroup
Performance |
| Timeline |
| CVS Health Corp |
| Citigroup |
CVS Health and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Citigroup
The main advantage of trading using opposite CVS Health and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Citigroup vs. Royal Bank of | Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Canadian Imperial Bank |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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