Correlation Between GMxico Transportes and CVS Health
Can any of the company-specific risk be diversified away by investing in both GMxico Transportes 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 GMxico Transportes and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMxico Transportes SAB and CVS Health, you can compare the effects of market volatilities on GMxico Transportes 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 GMxico Transportes with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and CVS Health.
Diversification Opportunities for GMxico Transportes and CVS Health
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMxico and CVS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and GMxico Transportes 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 GMxico Transportes SAB 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 GMxico Transportes i.e., GMxico Transportes and CVS Health go up and down completely randomly.
Pair Corralation between GMxico Transportes and CVS Health
Assuming the 90 days trading horizon GMxico Transportes SAB is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, GMxico Transportes SAB is 1.32 times less risky than CVS Health. The stock trades about -0.11 of its potential returns per unit of risk. The CVS Health is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 97,770 in CVS Health on August 29, 2024 and sell it today you would earn a total of 25,740 from holding CVS Health or generate 26.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMxico Transportes SAB vs. CVS Health
Performance |
| Timeline |
| GMxico Transportes SAB |
| CVS Health |
GMxico Transportes and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMxico Transportes and CVS Health
The main advantage of trading using opposite GMxico Transportes and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMxico Transportes 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.| GMxico Transportes vs. Grupo Mxico SAB | GMxico Transportes vs. The Select Sector | GMxico Transportes vs. SPDR Series Trust | GMxico Transportes vs. FibroGen |
| CVS Health vs. Grupo Hotelero Santa | CVS Health vs. GMxico Transportes SAB | CVS Health vs. Samsung Electronics Co | CVS Health vs. Verizon Communications |
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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