Correlation Between Ecclesiastical Insurance and CVS Health
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance 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 Ecclesiastical Insurance and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and CVS Health Corp, you can compare the effects of market volatilities on Ecclesiastical Insurance 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 Ecclesiastical Insurance with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and CVS Health.
Diversification Opportunities for Ecclesiastical Insurance and CVS Health
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ecclesiastical and CVS is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Ecclesiastical Insurance 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 Ecclesiastical Insurance Office 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 Corp has no effect on the direction of Ecclesiastical Insurance i.e., Ecclesiastical Insurance and CVS Health go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and CVS Health
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Ecclesiastical Insurance Office is 3.16 times less risky than CVS Health. The stock trades about -0.05 of its potential returns per unit of risk. The CVS Health Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,737 in CVS Health Corp on August 28, 2024 and sell it today you would earn a total of 264.00 from holding CVS Health Corp or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. CVS Health Corp
Performance |
| Timeline |
| Ecclesiastical Insurance |
| CVS Health Corp |
Ecclesiastical Insurance and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and CVS Health
The main advantage of trading using opposite Ecclesiastical Insurance and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance 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.| Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Samsung Electronics Co | Ecclesiastical Insurance vs. Hyundai Motor | Ecclesiastical Insurance vs. Toyota Motor Corp |
| CVS Health vs. Samsung Electronics Co | CVS Health vs. Samsung Electronics Co | CVS Health vs. Hyundai Motor | CVS Health vs. Toyota Motor Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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