Correlation Between Peak Resources and CVS Health
Can any of the company-specific risk be diversified away by investing in both Peak Resources 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 Peak Resources and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peak Resources Limited and CVS Health, you can compare the effects of market volatilities on Peak Resources 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 Peak Resources with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Resources and CVS Health.
Diversification Opportunities for Peak Resources and CVS Health
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Peak and CVS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and CVS Health go up and down completely randomly.
Pair Corralation between Peak Resources and CVS Health
Assuming the 90 days horizon Peak Resources Limited is expected to under-perform the CVS Health. In addition to that, Peak Resources is 3.34 times more volatile than CVS Health. It trades about -0.04 of its total potential returns per unit of risk. CVS Health is currently generating about 0.05 per unit of volatility. If you would invest 5,235 in CVS Health on September 4, 2024 and sell it today you would earn a total of 398.00 from holding CVS Health or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Peak Resources Limited vs. CVS Health
Performance |
| Timeline |
| Peak Resources |
| CVS Health |
Peak Resources and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Peak Resources and CVS Health
The main advantage of trading using opposite Peak Resources and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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.| Peak Resources vs. BHP Group Limited | Peak Resources vs. Rio Tinto Group | Peak Resources vs. Vale SA | Peak Resources vs. Glencore plc |
| CVS Health vs. TOTAL GABON | CVS Health vs. Walgreens Boots Alliance | CVS Health vs. Peak Resources Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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