Correlation Between Eton Pharmaceuticals and CVS Health
Can any of the company-specific risk be diversified away by investing in both Eton Pharmaceuticals 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 Eton Pharmaceuticals and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eton Pharmaceuticals and CVS Health Corp, you can compare the effects of market volatilities on Eton Pharmaceuticals 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 Eton Pharmaceuticals with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eton Pharmaceuticals and CVS Health.
Diversification Opportunities for Eton Pharmaceuticals and CVS Health
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eton and CVS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals 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 Eton Pharmaceuticals 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 Eton Pharmaceuticals 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 Eton Pharmaceuticals i.e., Eton Pharmaceuticals and CVS Health go up and down completely randomly.
Pair Corralation between Eton Pharmaceuticals and CVS Health
Given the investment horizon of 90 days Eton Pharmaceuticals is expected to generate 1.09 times less return on investment than CVS Health. In addition to that, Eton Pharmaceuticals is 2.66 times more volatile than CVS Health Corp. It trades about 0.22 of its total potential returns per unit of risk. CVS Health Corp is currently generating about 0.63 per unit of volatility. If you would invest 4,367 in CVS Health Corp on November 3, 2024 and sell it today you would earn a total of 1,281 from holding CVS Health Corp or generate 29.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eton Pharmaceuticals vs. CVS Health Corp
Performance |
| Timeline |
| Eton Pharmaceuticals |
| CVS Health Corp |
Eton Pharmaceuticals and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eton Pharmaceuticals and CVS Health
The main advantage of trading using opposite Eton Pharmaceuticals and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eton Pharmaceuticals 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.| Eton Pharmaceuticals vs. Connect Biopharma Holdings | Eton Pharmaceuticals vs. Acumen Pharmaceuticals | Eton Pharmaceuticals vs. Nuvation Bio | Eton Pharmaceuticals vs. Eledon Pharmaceuticals |
| CVS Health vs. Pennant Group | CVS Health vs. The Ensign Group | CVS Health vs. Encompass Health Corp | CVS Health vs. Healthcare Services Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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