Correlation Between Fidelity National and CVS Health
Can any of the company-specific risk be diversified away by investing in both Fidelity National 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 Fidelity National and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and CVS Health, you can compare the effects of market volatilities on Fidelity National 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 Fidelity National with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and CVS Health.
Diversification Opportunities for Fidelity National and CVS Health
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fidelity and CVS is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and CVS Health go up and down completely randomly.
Pair Corralation between Fidelity National and CVS Health
Assuming the 90 days trading horizon Fidelity National Information is expected to generate 0.47 times more return on investment than CVS Health. However, Fidelity National Information is 2.12 times less risky than CVS Health. It trades about -0.13 of its potential returns per unit of risk. CVS Health is currently generating about -0.18 per unit of risk. If you would invest 8,384 in Fidelity National Information on September 15, 2024 and sell it today you would lose (282.00) from holding Fidelity National Information or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. CVS Health
Performance |
| Timeline |
| Fidelity National |
| CVS Health |
Fidelity National and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and CVS Health
The main advantage of trading using opposite Fidelity National and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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.| Fidelity National vs. Rayonier Advanced Materials | Fidelity National vs. Major Drilling Group | Fidelity National vs. Martin Marietta Materials | Fidelity National vs. Eagle Materials |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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