Correlation Between Laureate Education and CVS Health
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and CVS Health, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and CVS Health.
Diversification Opportunities for Laureate Education and CVS Health
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Laureate and CVS is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and CVS Health go up and down completely randomly.
Pair Corralation between Laureate Education and CVS Health
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.78 times more return on investment than CVS Health. However, Laureate Education is 1.29 times less risky than CVS Health. It trades about 0.12 of its potential returns per unit of risk. CVS Health is currently generating about -0.09 per unit of risk. If you would invest 1,470 in Laureate Education on September 26, 2024 and sell it today you would earn a total of 280.00 from holding Laureate Education or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. CVS Health
Performance |
| Timeline |
| Laureate Education |
| CVS Health |
Laureate Education and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and CVS Health
The main advantage of trading using opposite Laureate Education and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. Science Applications International | Laureate Education vs. Datalogic SpA | Laureate Education vs. DATANG INTL POW | Laureate Education vs. GREENX METALS LTD |
| CVS Health vs. ATOSS SOFTWARE | CVS Health vs. Alfa Financial Software | CVS Health vs. Check Point Software | CVS Health vs. Laureate Education |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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