Correlation Between CVS Health and Stryker
Can any of the company-specific risk be diversified away by investing in both CVS Health and Stryker 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 Stryker 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 Stryker, you can compare the effects of market volatilities on CVS Health and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Stryker.
Diversification Opportunities for CVS Health and Stryker
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVS and Stryker is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of CVS Health i.e., CVS Health and Stryker go up and down completely randomly.
Pair Corralation between CVS Health and Stryker
Considering the 90-day investment horizon CVS Health Corp is expected to generate 3.16 times more return on investment than Stryker. However, CVS Health is 3.16 times more volatile than Stryker. It trades about 0.33 of its potential returns per unit of risk. Stryker is currently generating about 0.02 per unit of risk. If you would invest 5,196 in CVS Health Corp on November 18, 2024 and sell it today you would earn a total of 1,387 from holding CVS Health Corp or generate 26.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Stryker
Performance |
| Timeline |
| CVS Health Corp |
| Stryker |
CVS Health and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Stryker
The main advantage of trading using opposite CVS Health and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker's long position.| CVS Health vs. The Ensign Group | CVS Health vs. Select Medical Holdings | CVS Health vs. Encompass Health Corp | CVS Health vs. InnovAge Holding Corp |
| Stryker vs. Boston Scientific Corp | Stryker vs. Abbott Laboratories | Stryker vs. Medtronic PLC | Stryker vs. DexCom Inc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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