Correlation Between CVS Health and Sony
Can any of the company-specific risk be diversified away by investing in both CVS Health and Sony 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 Sony into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Sony Group, you can compare the effects of market volatilities on CVS Health and Sony 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 Sony. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Sony.
Diversification Opportunities for CVS Health and Sony
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Sony is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Sony Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sony Group 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 Sony. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sony Group has no effect on the direction of CVS Health i.e., CVS Health and Sony go up and down completely randomly.
Pair Corralation between CVS Health and Sony
Assuming the 90 days trading horizon CVS Health is expected to generate 280.69 times less return on investment than Sony. But when comparing it to its historical volatility, CVS Health is 12.58 times less risky than Sony. It trades about 0.0 of its potential returns per unit of risk. Sony Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 9,475 in Sony Group on November 3, 2024 and sell it today you would earn a total of 3,378 from holding Sony Group or generate 35.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.98% |
| Values | Daily Returns |
CVS Health vs. Sony Group
Performance |
| Timeline |
| CVS Health |
| Sony Group |
CVS Health and Sony Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Sony
The main advantage of trading using opposite CVS Health and Sony positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Sony 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 Sony will offset losses from the drop in Sony's long position.| CVS Health vs. Globus Medical, | CVS Health vs. Pure Storage, | CVS Health vs. TAL Education Group | CVS Health vs. Fair Isaac |
| Sony vs. JB Hunt Transport | Sony vs. Liberty Broadband | Sony vs. New Oriental Education | Sony vs. Broadridge Financial Solutions, |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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