Correlation Between CVS Health and Varex Imaging
Can any of the company-specific risk be diversified away by investing in both CVS Health and Varex Imaging 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 Varex Imaging 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 Varex Imaging Corp, you can compare the effects of market volatilities on CVS Health and Varex Imaging 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 Varex Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Varex Imaging.
Diversification Opportunities for CVS Health and Varex Imaging
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Varex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Varex Imaging Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varex Imaging Corp 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 Varex Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varex Imaging Corp has no effect on the direction of CVS Health i.e., CVS Health and Varex Imaging go up and down completely randomly.
Pair Corralation between CVS Health and Varex Imaging
Considering the 90-day investment horizon CVS Health is expected to generate 3.84 times less return on investment than Varex Imaging. In addition to that, CVS Health is 1.32 times more volatile than Varex Imaging Corp. It trades about 0.08 of its total potential returns per unit of risk. Varex Imaging Corp is currently generating about 0.39 per unit of volatility. If you would invest 1,315 in Varex Imaging Corp on August 27, 2024 and sell it today you would earn a total of 324.00 from holding Varex Imaging Corp or generate 24.64% 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. Varex Imaging Corp
Performance |
| Timeline |
| CVS Health Corp |
| Varex Imaging Corp |
CVS Health and Varex Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Varex Imaging
The main advantage of trading using opposite CVS Health and Varex Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Varex Imaging 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 Varex Imaging will offset losses from the drop in Varex Imaging's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Varex Imaging vs. Sight Sciences | Varex Imaging vs. Apyx Medical | Varex Imaging vs. Si Bone | Varex Imaging vs. Iradimed Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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