Correlation Between IShares Trust and CVS Health
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and CVS Health, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and CVS Health.
Diversification Opportunities for IShares Trust and CVS Health
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and CVS is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and CVS Health go up and down completely randomly.
Pair Corralation between IShares Trust and CVS Health
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.17 times less return on investment than CVS Health. But when comparing it to its historical volatility, iShares Trust is 1.65 times less risky than CVS Health. It trades about 0.09 of its potential returns per unit of risk. CVS Health is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 105,618 in CVS Health on September 2, 2024 and sell it today you would earn a total of 15,782 from holding CVS Health or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares Trust vs. CVS Health
Performance |
| Timeline |
| iShares Trust |
| CVS Health |
IShares Trust and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and CVS Health
The main advantage of trading using opposite IShares Trust and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| CVS Health vs. DXC Technology | CVS Health vs. United Airlines Holdings | CVS Health vs. Genworth Financial | CVS Health vs. Deutsche Bank Aktiengesellschaft |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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