Correlation Between CVS Health and Sibanye Stillwater
Can any of the company-specific risk be diversified away by investing in both CVS Health and Sibanye Stillwater 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 Sibanye Stillwater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Sibanye Stillwater Limited, you can compare the effects of market volatilities on CVS Health and Sibanye Stillwater 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 Sibanye Stillwater. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Sibanye Stillwater.
Diversification Opportunities for CVS Health and Sibanye Stillwater
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Sibanye is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater 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 Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of CVS Health i.e., CVS Health and Sibanye Stillwater go up and down completely randomly.
Pair Corralation between CVS Health and Sibanye Stillwater
Assuming the 90 days trading horizon CVS Health is expected to generate 0.6 times more return on investment than Sibanye Stillwater. However, CVS Health is 1.67 times less risky than Sibanye Stillwater. It trades about 0.5 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about 0.06 per unit of risk. If you would invest 2,697 in CVS Health on November 2, 2024 and sell it today you would earn a total of 599.00 from holding CVS Health or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
CVS Health vs. Sibanye Stillwater Limited
Performance |
| Timeline |
| CVS Health |
| Sibanye Stillwater |
CVS Health and Sibanye Stillwater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Sibanye Stillwater
The main advantage of trading using opposite CVS Health and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.| CVS Health vs. United Rentals | CVS Health vs. Charter Communications | CVS Health vs. Ares Management | CVS Health vs. Molson Coors Beverage |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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