Correlation Between CVS Health and Coherus BioSciences
Can any of the company-specific risk be diversified away by investing in both CVS Health and Coherus BioSciences 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 Coherus BioSciences 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 Coherus BioSciences, you can compare the effects of market volatilities on CVS Health and Coherus BioSciences 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 Coherus BioSciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Coherus BioSciences.
Diversification Opportunities for CVS Health and Coherus BioSciences
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and Coherus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Coherus BioSciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherus BioSciences 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 Coherus BioSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherus BioSciences has no effect on the direction of CVS Health i.e., CVS Health and Coherus BioSciences go up and down completely randomly.
Pair Corralation between CVS Health and Coherus BioSciences
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.85 times more return on investment than Coherus BioSciences. However, CVS Health Corp is 1.18 times less risky than Coherus BioSciences. It trades about 0.23 of its potential returns per unit of risk. Coherus BioSciences is currently generating about -0.06 per unit of risk. If you would invest 5,595 in CVS Health Corp on December 5, 2024 and sell it today you would earn a total of 1,023 from holding CVS Health Corp or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Coherus BioSciences
Performance |
| Timeline |
| CVS Health Corp |
| Coherus BioSciences |
CVS Health and Coherus BioSciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Coherus BioSciences
The main advantage of trading using opposite CVS Health and Coherus BioSciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Coherus BioSciences 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 Coherus BioSciences will offset losses from the drop in Coherus BioSciences' long position.| CVS Health vs. Humana Inc | ||
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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