Correlation Between Natural Health and CVS Health
Can any of the company-specific risk be diversified away by investing in both Natural Health 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 Natural Health and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and CVS Health, you can compare the effects of market volatilities on Natural Health 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 Natural Health with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and CVS Health.
Diversification Opportunities for Natural Health and CVS Health
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and CVS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Natural Health 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 Natural Health Trends 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 Natural Health i.e., Natural Health and CVS Health go up and down completely randomly.
Pair Corralation between Natural Health and CVS Health
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trends is 1.01 times less risky than CVS Health. The stock trades about -0.03 of its potential returns per unit of risk. The CVS Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,396 in CVS Health on September 2, 2024 and sell it today you would earn a total of 259.00 from holding CVS Health or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. CVS Health
Performance |
| Timeline |
| Natural Health Trends |
| CVS Health |
Natural Health and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and CVS Health
The main advantage of trading using opposite Natural Health and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health 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.| Natural Health vs. NURAN WIRELESS INC | Natural Health vs. YOOMA WELLNESS INC | Natural Health vs. Haverty Furniture Companies | Natural Health vs. LGI Homes |
| CVS Health vs. INTERSHOP Communications Aktiengesellschaft | CVS Health vs. Computershare Limited | CVS Health vs. Charter Communications | CVS Health vs. KRISPY KREME DL 01 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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