Correlation Between Energisa and CVS Health
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and CVS Health, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and CVS Health.
Diversification Opportunities for Energisa and CVS Health
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and CVS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Energisa 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 Energisa SA 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 Energisa i.e., Energisa and CVS Health go up and down completely randomly.
Pair Corralation between Energisa and CVS Health
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 2.18 times less risky than CVS Health. The stock trades about -0.14 of its potential returns per unit of risk. The CVS Health is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,270 in CVS Health on August 31, 2024 and sell it today you would earn a total of 256.00 from holding CVS Health or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. CVS Health
Performance |
| Timeline |
| Energisa SA |
| CVS Health |
Energisa and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and CVS Health
The main advantage of trading using opposite Energisa and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| CVS Health vs. Fras le SA | CVS Health vs. Western Digital | CVS Health vs. Energisa SA | CVS Health vs. Clave Indices De |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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