Correlation Between Mohawk Industries and CVS Health
Can any of the company-specific risk be diversified away by investing in both Mohawk Industries 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 Mohawk Industries and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mohawk Industries and CVS Health, you can compare the effects of market volatilities on Mohawk Industries 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 Mohawk Industries with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mohawk Industries and CVS Health.
Diversification Opportunities for Mohawk Industries and CVS Health
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mohawk and CVS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mohawk Industries and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Mohawk Industries 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 Mohawk Industries 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 Mohawk Industries i.e., Mohawk Industries and CVS Health go up and down completely randomly.
Pair Corralation between Mohawk Industries and CVS Health
Assuming the 90 days horizon Mohawk Industries is expected to generate 1.21 times more return on investment than CVS Health. However, Mohawk Industries is 1.21 times more volatile than CVS Health. It trades about 0.03 of its potential returns per unit of risk. CVS Health is currently generating about -0.03 per unit of risk. If you would invest 10,200 in Mohawk Industries on September 3, 2024 and sell it today you would earn a total of 2,800 from holding Mohawk Industries or generate 27.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mohawk Industries vs. CVS Health
Performance |
| Timeline |
| Mohawk Industries |
| CVS Health |
Mohawk Industries and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mohawk Industries and CVS Health
The main advantage of trading using opposite Mohawk Industries and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mohawk Industries 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.| Mohawk Industries vs. CVS Health | Mohawk Industries vs. GRIFFIN MINING LTD | Mohawk Industries vs. Addus HomeCare | Mohawk Industries vs. GALENA MINING LTD |
| CVS Health vs. GFL ENVIRONM | CVS Health vs. Reliance Steel Aluminum | CVS Health vs. Chunghwa Telecom Co | CVS Health vs. BlueScope Steel 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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