Correlation Between GP Investments and CVS Health
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and CVS Health, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and CVS Health.
Diversification Opportunities for GP Investments and CVS Health
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between GPIV33 and CVS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and CVS Health go up and down completely randomly.
Pair Corralation between GP Investments and CVS Health
Assuming the 90 days trading horizon GP Investments is expected to generate 1.23 times more return on investment than CVS Health. However, GP Investments is 1.23 times more volatile than CVS Health. It trades about 0.04 of its potential returns per unit of risk. CVS Health is currently generating about 0.02 per unit of risk. If you would invest 285.00 in GP Investments on August 31, 2024 and sell it today you would earn a total of 113.00 from holding GP Investments or generate 39.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.17% |
| Values | Daily Returns |
GP Investments vs. CVS Health
Performance |
| Timeline |
| GP Investments |
| CVS Health |
GP Investments and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and CVS Health
The main advantage of trading using opposite GP Investments and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. The Bank of | GP Investments vs. Ameriprise Financial | GP Investments vs. Banco BTG Pactual | GP Investments vs. Banco BTG Pactual |
| CVS Health vs. Fras le SA | CVS Health vs. Western Digital | CVS Health vs. Energisa SA | CVS Health vs. Clave Indices De |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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