Correlation Between STAG Industrial, and CVS Health
Can any of the company-specific risk be diversified away by investing in both STAG Industrial, 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 STAG Industrial, and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STAG Industrial, and CVS Health, you can compare the effects of market volatilities on STAG Industrial, 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 STAG Industrial, with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAG Industrial, and CVS Health.
Diversification Opportunities for STAG Industrial, and CVS Health
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between STAG and CVS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding STAG Industrial, and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and STAG Industrial, 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 STAG Industrial, 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 STAG Industrial, i.e., STAG Industrial, and CVS Health go up and down completely randomly.
Pair Corralation between STAG Industrial, and CVS Health
Assuming the 90 days trading horizon STAG Industrial, is expected to generate 0.77 times more return on investment than CVS Health. However, STAG Industrial, is 1.29 times less risky than CVS Health. It trades about -0.1 of its potential returns per unit of risk. CVS Health is currently generating about -0.17 per unit of risk. If you would invest 4,271 in STAG Industrial, on October 12, 2024 and sell it today you would lose (187.00) from holding STAG Industrial, or give up 4.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STAG Industrial, vs. CVS Health
Performance |
| Timeline |
| STAG Industrial, |
| CVS Health |
STAG Industrial, and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STAG Industrial, and CVS Health
The main advantage of trading using opposite STAG Industrial, and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STAG Industrial, 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.| STAG Industrial, vs. Taiwan Semiconductor Manufacturing | STAG Industrial, vs. Apple Inc | STAG Industrial, vs. Alibaba Group Holding | STAG Industrial, vs. Banco Santander Chile |
| CVS Health vs. Palantir Technologies | CVS Health vs. Zebra Technologies | CVS Health vs. Trane Technologies plc | CVS Health vs. Tyler Technologies, |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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