Correlation Between CVS Health and ResMed
Can any of the company-specific risk be diversified away by investing in both CVS Health and ResMed 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 ResMed 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 ResMed Inc, you can compare the effects of market volatilities on CVS Health and ResMed 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 ResMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and ResMed.
Diversification Opportunities for CVS Health and ResMed
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and ResMed is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed 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 ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of CVS Health i.e., CVS Health and ResMed go up and down completely randomly.
Pair Corralation between CVS Health and ResMed
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the ResMed. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.17 times less risky than ResMed. The stock trades about -0.01 of its potential returns per unit of risk. The ResMed Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21,171 in ResMed Inc on August 31, 2024 and sell it today you would earn a total of 3,731 from holding ResMed Inc or generate 17.62% 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. ResMed Inc
Performance |
| Timeline |
| CVS Health Corp |
| ResMed Inc |
CVS Health and ResMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and ResMed
The main advantage of trading using opposite CVS Health and ResMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, ResMed 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 ResMed will offset losses from the drop in ResMed's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| ResMed vs. Teleflex Incorporated | ResMed vs. West Pharmaceutical Services | ResMed vs. Alcon AG | ResMed vs. ICU Medical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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