Correlation Between Kforce and CVS Health
Can any of the company-specific risk be diversified away by investing in both Kforce 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 Kforce and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kforce Inc and CVS Health Corp, you can compare the effects of market volatilities on Kforce 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 Kforce with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kforce and CVS Health.
Diversification Opportunities for Kforce and CVS Health
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kforce and CVS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Kforce 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 Kforce Inc 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 Corp has no effect on the direction of Kforce i.e., Kforce and CVS Health go up and down completely randomly.
Pair Corralation between Kforce and CVS Health
Given the investment horizon of 90 days Kforce Inc is expected to generate 0.48 times more return on investment than CVS Health. However, Kforce Inc is 2.1 times less risky than CVS Health. It trades about 0.04 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.42 per unit of risk. If you would invest 5,799 in Kforce Inc on September 19, 2024 and sell it today you would earn a total of 50.00 from holding Kforce Inc or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kforce Inc vs. CVS Health Corp
Performance |
| Timeline |
| Kforce Inc |
| CVS Health Corp |
Kforce and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kforce and CVS Health
The main advantage of trading using opposite Kforce and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kforce 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.| Kforce vs. Heidrick Struggles International | Kforce vs. ManpowerGroup | Kforce vs. Korn Ferry | Kforce vs. Hudson Global |
| CVS Health vs. ASGN Inc | CVS Health vs. Kforce Inc | CVS Health vs. Kelly Services A | CVS Health vs. Central Garden Pet |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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