Correlation Between CVS Health and 70GD

Can any of the company-specific risk be diversified away by investing in both CVS Health and 70GD 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 CVS Health and 70GD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVS Health Corp and 70GD, you can compare the effects of market volatilities on CVS Health and 70GD 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 CVS Health with a short position of 70GD. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and 70GD.

Diversification Opportunities for CVS Health and 70GD

0.0

Correlation Coefficient

CVS Health  70GD

Pay attention - limited upside

The 3 months correlation between CVS and 70GD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and 70GD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 70GD and CVS Health 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 CVS Health Corp are associated (or correlated) with 70GD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 70GD has no effect on the direction of CVS Health i.e., CVS Health and 70GD go up and down completely randomly.

Pair Corralation between CVS Health and 70GD

If you would invest  4,381  in CVS Health Corp on December 26, 2024 and sell it today you would earn a total of  2,312  from holding CVS Health Corp or generate 52.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

CVS Health Corp  vs.  70GD

CVS Health Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVS Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

70GD

Risk-Adjusted Performance

Very Weak

Over the last 90 days 70GD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 70GD is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVS Health and 70GD

The main advantage of trading using opposite CVS Health and 70GD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, 70GD 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 70GD will offset losses from the drop in 70GD's long position.

The idea behind CVS Health Corp and 70GD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.