Correlation Between CVS Health and Hospital Mater
Can any of the company-specific risk be diversified away by investing in both CVS Health and Hospital Mater 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 Hospital Mater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Hospital Mater Dei, you can compare the effects of market volatilities on CVS Health and Hospital Mater 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 Hospital Mater. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Hospital Mater.
Diversification Opportunities for CVS Health and Hospital Mater
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Hospital is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Hospital Mater Dei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hospital Mater Dei 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 Hospital Mater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hospital Mater Dei has no effect on the direction of CVS Health i.e., CVS Health and Hospital Mater go up and down completely randomly.
Pair Corralation between CVS Health and Hospital Mater
Assuming the 90 days trading horizon CVS Health is expected to generate 0.98 times more return on investment than Hospital Mater. However, CVS Health is 1.02 times less risky than Hospital Mater. It trades about 0.02 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about -0.08 per unit of risk. If you would invest 3,296 in CVS Health on September 2, 2024 and sell it today you would earn a total of 316.00 from holding CVS Health or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.88% |
| Values | Daily Returns |
CVS Health vs. Hospital Mater Dei
Performance |
| Timeline |
| CVS Health |
| Hospital Mater Dei |
CVS Health and Hospital Mater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Hospital Mater
The main advantage of trading using opposite CVS Health and Hospital Mater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Hospital Mater 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 Hospital Mater will offset losses from the drop in Hospital Mater's long position.| CVS Health vs. Fras le SA | CVS Health vs. Western Digital | CVS Health vs. Energisa SA | CVS Health vs. Clave Indices De |
| Hospital Mater vs. CVS Health | Hospital Mater vs. Healthpeak Properties | Hospital Mater vs. Verizon Communications | Hospital Mater vs. Zoom Video Communications |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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