Correlation Between CVS Health and Zhongchao
Can any of the company-specific risk be diversified away by investing in both CVS Health and Zhongchao 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 Zhongchao 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 Zhongchao, you can compare the effects of market volatilities on CVS Health and Zhongchao 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 Zhongchao. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Zhongchao.
Diversification Opportunities for CVS Health and Zhongchao
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVS and Zhongchao is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Zhongchao in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongchao 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 Zhongchao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongchao has no effect on the direction of CVS Health i.e., CVS Health and Zhongchao go up and down completely randomly.
Pair Corralation between CVS Health and Zhongchao
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.23 times more return on investment than Zhongchao. However, CVS Health Corp is 4.41 times less risky than Zhongchao. It trades about -0.01 of its potential returns per unit of risk. Zhongchao is currently generating about -0.04 per unit of risk. If you would invest 6,823 in CVS Health Corp on September 1, 2024 and sell it today you would lose (838.00) from holding CVS Health Corp or give up 12.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. Zhongchao
Performance |
| Timeline |
| CVS Health Corp |
| Zhongchao |
CVS Health and Zhongchao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Zhongchao
The main advantage of trading using opposite CVS Health and Zhongchao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Zhongchao 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 Zhongchao will offset losses from the drop in Zhongchao's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| Zhongchao vs. Nano Mobile Healthcare | Zhongchao vs. Healthcare Triangle | Zhongchao vs. Cannabis Sativa | Zhongchao vs. FOXO Technologies |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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