Correlation Between METISA Metalrgica and CVS Health
Can any of the company-specific risk be diversified away by investing in both METISA Metalrgica 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 METISA Metalrgica and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METISA Metalrgica Timboense and CVS Health, you can compare the effects of market volatilities on METISA Metalrgica 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 METISA Metalrgica with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and CVS Health.
Diversification Opportunities for METISA Metalrgica and CVS Health
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METISA and CVS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and METISA Metalrgica 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 METISA Metalrgica Timboense 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 METISA Metalrgica i.e., METISA Metalrgica and CVS Health go up and down completely randomly.
Pair Corralation between METISA Metalrgica and CVS Health
Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the CVS Health. But the preferred stock apears to be less risky and, when comparing its historical volatility, METISA Metalrgica Timboense is 1.3 times less risky than CVS Health. The preferred stock trades about -0.03 of its potential returns per unit of risk. The CVS Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,201 in CVS Health on August 28, 2024 and sell it today you would earn a total of 260.00 from holding CVS Health or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.52% |
| Values | Daily Returns |
METISA Metalrgica Timboense vs. CVS Health
Performance |
| Timeline |
| METISA Metalrgica |
| CVS Health |
METISA Metalrgica and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METISA Metalrgica and CVS Health
The main advantage of trading using opposite METISA Metalrgica and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METISA Metalrgica 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.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. Indstrias Romi SA | METISA Metalrgica vs. Clave Indices De | METISA Metalrgica vs. BTG Pactual Logstica |
| CVS Health vs. Paycom Software | CVS Health vs. Extra Space Storage | CVS Health vs. Unity Software | CVS Health vs. Spotify Technology SA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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