Correlation Between Signature Resources and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both Signature Resources 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 Signature Resources and CVS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Signature Resources and CVS HEALTH CDR, you can compare the effects of market volatilities on Signature Resources 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 Signature Resources with a short position of CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signature Resources and CVS HEALTH.
Diversification Opportunities for Signature Resources and CVS HEALTH
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Signature and CVS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Signature Resources and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Signature Resources 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 Signature Resources 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 CDR has no effect on the direction of Signature Resources i.e., Signature Resources and CVS HEALTH go up and down completely randomly.
Pair Corralation between Signature Resources and CVS HEALTH
Assuming the 90 days horizon Signature Resources is expected to generate 4.55 times less return on investment than CVS HEALTH. In addition to that, Signature Resources is 3.93 times more volatile than CVS HEALTH CDR. It trades about 0.03 of its total potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.61 per unit of volatility. If you would invest 1,086 in CVS HEALTH CDR on November 3, 2024 and sell it today you would earn a total of 315.00 from holding CVS HEALTH CDR or generate 29.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Signature Resources vs. CVS HEALTH CDR
Performance |
| Timeline |
| Signature Resources |
| CVS HEALTH CDR |
Signature Resources and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Signature Resources and CVS HEALTH
The main advantage of trading using opposite Signature Resources and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signature Resources 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.| Signature Resources vs. Andlauer Healthcare Gr | Signature Resources vs. Bausch Health Companies | Signature Resources vs. Verizon Communications CDR | Signature Resources vs. Nicola Mining |
| CVS HEALTH vs. Firan Technology Group | CVS HEALTH vs. Sangoma Technologies Corp | CVS HEALTH vs. Costco Wholesale Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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