Correlation Between Glencore Plc and CVS Health
Can any of the company-specific risk be diversified away by investing in both Glencore Plc 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 Glencore Plc and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Glencore plc and CVS Health, you can compare the effects of market volatilities on Glencore Plc 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 Glencore Plc with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glencore Plc and CVS Health.
Diversification Opportunities for Glencore Plc and CVS Health
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Glencore and CVS is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Glencore plc and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Glencore Plc 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 Glencore plc 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 Glencore Plc i.e., Glencore Plc and CVS Health go up and down completely randomly.
Pair Corralation between Glencore Plc and CVS Health
If you would invest 114,800 in CVS Health on August 29, 2024 and sell it today you would earn a total of 7,699 from holding CVS Health or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Glencore plc vs. CVS Health
Performance |
| Timeline |
| Glencore plc |
| CVS Health |
Glencore Plc and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Glencore Plc and CVS Health
The main advantage of trading using opposite Glencore Plc and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Glencore Plc 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.The idea behind Glencore plc and CVS Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CVS Health vs. Glencore plc | CVS Health vs. iShares Trust | CVS Health vs. US Bancorp | CVS Health vs. American Express |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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