Correlation Between CVS Health and DocGo
Can any of the company-specific risk be diversified away by investing in both CVS Health and DocGo 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 DocGo 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 DocGo Inc, you can compare the effects of market volatilities on CVS Health and DocGo 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 DocGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and DocGo.
Diversification Opportunities for CVS Health and DocGo
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and DocGo is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and DocGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DocGo 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 DocGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DocGo Inc has no effect on the direction of CVS Health i.e., CVS Health and DocGo go up and down completely randomly.
Pair Corralation between CVS Health and DocGo
Considering the 90-day investment horizon CVS Health is expected to generate 5.42 times less return on investment than DocGo. In addition to that, CVS Health is 1.08 times more volatile than DocGo Inc. It trades about 0.05 of its total potential returns per unit of risk. DocGo Inc is currently generating about 0.3 per unit of volatility. If you would invest 347.00 in DocGo Inc on August 29, 2024 and sell it today you would earn a total of 83.00 from holding DocGo Inc or generate 23.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. DocGo Inc
Performance |
| Timeline |
| CVS Health Corp |
| DocGo Inc |
CVS Health and DocGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and DocGo
The main advantage of trading using opposite CVS Health and DocGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, DocGo 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 DocGo will offset losses from the drop in DocGo'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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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