Correlation Between Xtract One and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both Xtract One 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 Xtract One and CVS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtract One Technologies and CVS HEALTH CDR, you can compare the effects of market volatilities on Xtract One 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 Xtract One with a short position of CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtract One and CVS HEALTH.
Diversification Opportunities for Xtract One and CVS HEALTH
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtract and CVS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xtract One Technologies 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 Xtract One 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 Xtract One Technologies 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 Xtract One i.e., Xtract One and CVS HEALTH go up and down completely randomly.
Pair Corralation between Xtract One and CVS HEALTH
Assuming the 90 days trading horizon Xtract One Technologies is expected to generate 2.02 times more return on investment than CVS HEALTH. However, Xtract One is 2.02 times more volatile than CVS HEALTH CDR. It trades about 0.02 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.05 per unit of risk. If you would invest 52.00 in Xtract One Technologies on October 11, 2024 and sell it today you would earn a total of 2.00 from holding Xtract One Technologies or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtract One Technologies vs. CVS HEALTH CDR
Performance |
| Timeline |
| Xtract One Technologies |
| CVS HEALTH CDR |
Xtract One and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtract One and CVS HEALTH
The main advantage of trading using opposite Xtract One and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtract One 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.| Xtract One vs. NextSource Materials | Xtract One vs. Pace Metals | Xtract One vs. NeXGold Mining Corp | Xtract One vs. Partners Value Investments |
| CVS HEALTH vs. Contagious Gaming | CVS HEALTH vs. East Side Games | CVS HEALTH vs. Gfl Environmental Holdings | CVS HEALTH vs. Micron Technology, |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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