Correlation Between London Security and CVS Health
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and CVS Health Corp, you can compare the effects of market volatilities on London Security 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 London Security with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and CVS Health.
Diversification Opportunities for London Security and CVS Health
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between London and CVS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc 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 London Security 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 London Security Plc 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 London Security i.e., London Security and CVS Health go up and down completely randomly.
Pair Corralation between London Security and CVS Health
Assuming the 90 days trading horizon London Security Plc is expected to generate 0.46 times more return on investment than CVS Health. However, London Security Plc is 2.18 times less risky than CVS Health. It trades about 0.21 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.6 per unit of risk. If you would invest 325,000 in London Security Plc on September 27, 2024 and sell it today you would earn a total of 15,000 from holding London Security Plc or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. CVS Health Corp
Performance |
| Timeline |
| London Security Plc |
| CVS Health Corp |
London Security and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and CVS Health
The main advantage of trading using opposite London Security and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Tungsten West PLC | London Security vs. Argo Group Limited | London Security vs. Hardide PLC | London Security vs. Gfinity PLC |
| CVS Health vs. Uniper SE | CVS Health vs. Mulberry Group PLC | CVS Health vs. London Security Plc | CVS Health vs. Triad Group PLC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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