Correlation Between Old Mutual and CVS Health
Can any of the company-specific risk be diversified away by investing in both Old Mutual 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 Old Mutual and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and CVS Health Corp, you can compare the effects of market volatilities on Old Mutual 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 Old Mutual with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and CVS Health.
Diversification Opportunities for Old Mutual and CVS Health
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and CVS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual 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 Old Mutual 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 Old Mutual 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 Old Mutual i.e., Old Mutual and CVS Health go up and down completely randomly.
Pair Corralation between Old Mutual and CVS Health
Assuming the 90 days trading horizon Old Mutual is expected to generate 7.82 times less return on investment than CVS Health. But when comparing it to its historical volatility, Old Mutual is 2.49 times less risky than CVS Health. It trades about 0.03 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,517 in CVS Health Corp on September 5, 2024 and sell it today you would earn a total of 424.00 from holding CVS Health Corp or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. CVS Health Corp
Performance |
| Timeline |
| Old Mutual |
| CVS Health Corp |
Old Mutual and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and CVS Health
The main advantage of trading using opposite Old Mutual and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual 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.| Old Mutual vs. Toyota Motor Corp | Old Mutual vs. SoftBank Group Corp | Old Mutual vs. Fannie Mae | Old Mutual vs. Panasonic Corp |
| CVS Health vs. Taylor Maritime Investments | CVS Health vs. Schroders Investment Trusts | CVS Health vs. Indutrade AB | CVS Health vs. Virgin Wines UK |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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