Correlation Between Dell Technologies and CVS Health
Can any of the company-specific risk be diversified away by investing in both Dell Technologies and CVS Health 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 Dell Technologies and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dell Technologies and CVS Health, you can compare the effects of market volatilities on Dell Technologies and CVS Health 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 Dell Technologies with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and CVS Health.
Diversification Opportunities for Dell Technologies and CVS Health
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dell and CVS is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Dell Technologies 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 Dell Technologies are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Dell Technologies i.e., Dell Technologies and CVS Health go up and down completely randomly.
Pair Corralation between Dell Technologies and CVS Health
Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.45 times more return on investment than CVS Health. However, Dell Technologies is 1.45 times more volatile than CVS Health. It trades about 0.1 of its potential returns per unit of risk. CVS Health is currently generating about 0.02 per unit of risk. If you would invest 18,993 in Dell Technologies on November 28, 2024 and sell it today you would earn a total of 44,932 from holding Dell Technologies or generate 236.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.45% |
| Values | Daily Returns |
Dell Technologies vs. CVS Health
Performance |
| Timeline |
| Dell Technologies |
| CVS Health |
Dell Technologies and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dell Technologies and CVS Health
The main advantage of trading using opposite Dell Technologies and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dell Technologies position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.| Dell Technologies vs. GP Investments | Dell Technologies vs. Automatic Data Processing | Dell Technologies vs. PENN Entertainment, | Dell Technologies vs. Chunghwa Telecom Co, |
| CVS Health vs. Apartment Investment and | CVS Health vs. METISA Metalrgica Timboense | CVS Health vs. Martin Marietta Materials, | CVS Health vs. Fair Isaac |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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