Correlation Between CVS Health and Paragon 28
Can any of the company-specific risk be diversified away by investing in both CVS Health and Paragon 28 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 Paragon 28 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 Paragon 28, you can compare the effects of market volatilities on CVS Health and Paragon 28 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 Paragon 28. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Paragon 28.
Diversification Opportunities for CVS Health and Paragon 28
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Paragon is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Paragon 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paragon 28 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 Paragon 28. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paragon 28 has no effect on the direction of CVS Health i.e., CVS Health and Paragon 28 go up and down completely randomly.
Pair Corralation between CVS Health and Paragon 28
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.44 times more return on investment than Paragon 28. However, CVS Health Corp is 2.29 times less risky than Paragon 28. It trades about -0.01 of its potential returns per unit of risk. Paragon 28 is currently generating about -0.01 per unit of risk. If you would invest 6,677 in CVS Health Corp on August 27, 2024 and sell it today you would lose (876.00) from holding CVS Health Corp or give up 13.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Paragon 28
Performance |
| Timeline |
| CVS Health Corp |
| Paragon 28 |
CVS Health and Paragon 28 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Paragon 28
The main advantage of trading using opposite CVS Health and Paragon 28 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Paragon 28 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 Paragon 28 will offset losses from the drop in Paragon 28's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Paragon 28 vs. Heartbeam | Paragon 28 vs. EUDA Health Holdings | Paragon 28 vs. Nutex Health | Paragon 28 vs. Healthcare Triangle |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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