Correlation Between CVS Health and SURETRACK MON

Can any of the company-specific risk be diversified away by investing in both CVS Health and SURETRACK MON 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 SURETRACK MON 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 SURETRACK MON , you can compare the effects of market volatilities on CVS Health and SURETRACK MON 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 SURETRACK MON. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and SURETRACK MON.

Diversification Opportunities for CVS Health and SURETRACK MON

-0.07

Correlation Coefficient

CVS Health  SURETRACK MON

Good diversification

The 3 months correlation between CVS and SURETRACK is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and SURETRACK MON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SURETRACK MON 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 SURETRACK MON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SURETRACK MON has no effect on the direction of CVS Health i.e., CVS Health and SURETRACK MON go up and down completely randomly.

Pair Corralation between CVS Health and SURETRACK MON

Assuming the 90 days trading horizon CVS Health is expected to generate 16.65 times less return on investment than SURETRACK MON. But when comparing it to its historical volatility, CVS Health Corp is 3.62 times less risky than SURETRACK MON. It trades about 0.04 of its potential returns per unit of risk. SURETRACK MON is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  23.00  in SURETRACK MON on September 5, 2024 and sell it today you would earn a total of  27.00  from holding SURETRACK MON or generate 117.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

CVS Health Corp  vs.  SURETRACK MON

CVS Health Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SURETRACK MON

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SURETRACK MON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, SURETRACK MON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVS Health and SURETRACK MON

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

The idea behind CVS Health Corp and SURETRACK MON 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.