Correlation Between Marks and CVS Health
Can any of the company-specific risk be diversified away by investing in both Marks 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 Marks and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marks and Spencer and CVS Health Corp, you can compare the effects of market volatilities on Marks 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 Marks with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marks and CVS Health.
Diversification Opportunities for Marks and CVS Health
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Marks and CVS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer 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 Marks 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 Marks and Spencer 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 Marks i.e., Marks and CVS Health go up and down completely randomly.
Pair Corralation between Marks and CVS Health
Assuming the 90 days trading horizon Marks and Spencer is expected to under-perform the CVS Health. In addition to that, Marks is 1.19 times more volatile than CVS Health Corp. It trades about -0.23 of its total potential returns per unit of risk. CVS Health Corp is currently generating about 0.61 per unit of volatility. If you would invest 4,348 in CVS Health Corp on October 31, 2024 and sell it today you would earn a total of 1,360 from holding CVS Health Corp or generate 31.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marks and Spencer vs. CVS Health Corp
Performance |
| Timeline |
| Marks and Spencer |
| CVS Health Corp |
Marks and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marks and CVS Health
The main advantage of trading using opposite Marks and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marks 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.| Marks vs. Grand Vision Media | Marks vs. Darden Restaurants | Marks vs. Liontrust Asset Management | Marks vs. XLMedia PLC |
| CVS Health vs. Take Two Interactive Software | CVS Health vs. International Biotechnology Trust | CVS Health vs. Spotify Technology SA | CVS Health vs. Sunny Optical Technology |
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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