Correlation Between Fiserv and CVS Health
Can any of the company-specific risk be diversified away by investing in both Fiserv 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 Fiserv and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiserv Inc and CVS Health, you can compare the effects of market volatilities on Fiserv 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 Fiserv with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiserv and CVS Health.
Diversification Opportunities for Fiserv and CVS Health
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fiserv and CVS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fiserv Inc and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Fiserv 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 Fiserv Inc 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 Fiserv i.e., Fiserv and CVS Health go up and down completely randomly.
Pair Corralation between Fiserv and CVS Health
Assuming the 90 days trading horizon Fiserv Inc is expected to generate 0.66 times more return on investment than CVS Health. However, Fiserv Inc is 1.52 times less risky than CVS Health. It trades about 0.12 of its potential returns per unit of risk. CVS Health is currently generating about -0.03 per unit of risk. If you would invest 205,800 in Fiserv Inc on September 4, 2024 and sell it today you would earn a total of 250,407 from holding Fiserv Inc or generate 121.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fiserv Inc vs. CVS Health
Performance |
| Timeline |
| Fiserv Inc |
| CVS Health |
Fiserv and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiserv and CVS Health
The main advantage of trading using opposite Fiserv and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiserv 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.| Fiserv vs. Verizon Communications | Fiserv vs. Monster Beverage Corp | Fiserv vs. Prudential Financial | Fiserv vs. Delta Air Lines |
| CVS Health vs. Samsung Electronics Co | CVS Health vs. First Republic Bank | CVS Health vs. Verizon Communications | CVS Health vs. First Majestic Silver |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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