Correlation Between CVS Health and Extra Space
Can any of the company-specific risk be diversified away by investing in both CVS Health and Extra Space 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 Extra Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Extra Space Storage, you can compare the effects of market volatilities on CVS Health and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Extra Space.
Diversification Opportunities for CVS Health and Extra Space
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVS and Extra is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 are associated (or correlated) with Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of CVS Health i.e., CVS Health and Extra Space go up and down completely randomly.
Pair Corralation between CVS Health and Extra Space
Assuming the 90 days trading horizon CVS Health is expected to generate 4.14 times less return on investment than Extra Space. In addition to that, CVS Health is 1.02 times more volatile than Extra Space Storage. It trades about 0.02 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.09 per unit of volatility. If you would invest 15,433 in Extra Space Storage on September 12, 2024 and sell it today you would earn a total of 9,015 from holding Extra Space Storage or generate 58.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.21% |
| Values | Daily Returns |
CVS Health vs. Extra Space Storage
Performance |
| Timeline |
| CVS Health |
| Extra Space Storage |
CVS Health and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Extra Space
The main advantage of trading using opposite CVS Health and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| CVS Health vs. Fundo Investimento Imobiliario | CVS Health vs. LESTE FDO INV | CVS Health vs. Fras le SA | CVS Health vs. Western Digital |
| Extra Space vs. BTG Pactual Logstica | Extra Space vs. Fundo Investimento Imobiliario | Extra Space vs. LESTE FDO INV | Extra Space vs. Fras le SA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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