Correlation Between Financial and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both Financial 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 Financial and CVS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial 15 Split and CVS HEALTH CDR, you can compare the effects of market volatilities on Financial 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 Financial with a short position of CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and CVS HEALTH.
Diversification Opportunities for Financial and CVS HEALTH
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Financial and CVS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Financial 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 Financial 15 Split 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 CDR has no effect on the direction of Financial i.e., Financial and CVS HEALTH go up and down completely randomly.
Pair Corralation between Financial and CVS HEALTH
Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.14 times more return on investment than CVS HEALTH. However, Financial 15 Split is 7.22 times less risky than CVS HEALTH. It trades about 0.08 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.07 per unit of risk. If you would invest 1,048 in Financial 15 Split on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Financial 15 Split or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial 15 Split vs. CVS HEALTH CDR
Performance |
| Timeline |
| Financial 15 Split |
| CVS HEALTH CDR |
Financial and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial and CVS HEALTH
The main advantage of trading using opposite Financial and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial 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.| Financial vs. North American Financial | Financial vs. Dividend 15 Split | Financial vs. Dividend Growth Split | Financial vs. Dividend 15 Split |
| CVS HEALTH vs. Extendicare | CVS HEALTH vs. Sienna Senior Living | CVS HEALTH vs. Rogers Sugar | CVS HEALTH vs. Chemtrade Logistics Income |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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