Correlation Between CVS Health and Welsbach Technology
Can any of the company-specific risk be diversified away by investing in both CVS Health and Welsbach Technology 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 Welsbach Technology 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 Welsbach Technology Metals, you can compare the effects of market volatilities on CVS Health and Welsbach Technology 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 Welsbach Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Welsbach Technology.
Diversification Opportunities for CVS Health and Welsbach Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and Welsbach is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Welsbach Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Welsbach Technology 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 Welsbach Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Welsbach Technology has no effect on the direction of CVS Health i.e., CVS Health and Welsbach Technology go up and down completely randomly.
Pair Corralation between CVS Health and Welsbach Technology
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.29 times more return on investment than Welsbach Technology. However, CVS Health Corp is 3.46 times less risky than Welsbach Technology. It trades about 0.59 of its potential returns per unit of risk. Welsbach Technology Metals is currently generating about -0.31 per unit of risk. If you would invest 4,525 in CVS Health Corp on November 5, 2024 and sell it today you would earn a total of 1,123 from holding CVS Health Corp or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.63% |
| Values | Daily Returns |
CVS Health Corp vs. Welsbach Technology Metals
Performance |
| Timeline |
| CVS Health Corp |
| Welsbach Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CVS Health and Welsbach Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Welsbach Technology
The main advantage of trading using opposite CVS Health and Welsbach Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Welsbach Technology 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 Welsbach Technology will offset losses from the drop in Welsbach Technology's long position.| CVS Health vs. Pennant Group | CVS Health vs. The Ensign Group | CVS Health vs. Encompass Health Corp | CVS Health vs. Healthcare Services Group |
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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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