Correlation Between CVS Health and STAG Industrial,
Can any of the company-specific risk be diversified away by investing in both CVS Health and STAG Industrial, 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 STAG Industrial, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and STAG Industrial,, you can compare the effects of market volatilities on CVS Health and STAG Industrial, 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 STAG Industrial,. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and STAG Industrial,.
Diversification Opportunities for CVS Health and STAG Industrial,
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVS and STAG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and STAG Industrial, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial, 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 STAG Industrial,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial, has no effect on the direction of CVS Health i.e., CVS Health and STAG Industrial, go up and down completely randomly.
Pair Corralation between CVS Health and STAG Industrial,
Assuming the 90 days trading horizon CVS Health is expected to under-perform the STAG Industrial,. In addition to that, CVS Health is 1.44 times more volatile than STAG Industrial,. It trades about -0.01 of its total potential returns per unit of risk. STAG Industrial, is currently generating about 0.02 per unit of volatility. If you would invest 3,533 in STAG Industrial, on October 27, 2024 and sell it today you would earn a total of 541.00 from holding STAG Industrial, or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.33% |
| Values | Daily Returns |
CVS Health vs. STAG Industrial,
Performance |
| Timeline |
| CVS Health |
| STAG Industrial, |
CVS Health and STAG Industrial, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and STAG Industrial,
The main advantage of trading using opposite CVS Health and STAG Industrial, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, STAG Industrial, 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 STAG Industrial, will offset losses from the drop in STAG Industrial,'s long position.| CVS Health vs. United Natural Foods, | CVS Health vs. Beyond Meat | CVS Health vs. Tyson Foods | CVS Health vs. Westinghouse Air Brake |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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