Correlation Between WIMFARM SA and CVS Health

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

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

Diversification Opportunities for WIMFARM SA and CVS Health

0.15

Correlation Coefficient

WIMFARM SA  CVS Health

Average diversification

The 3 months correlation between WIMFARM and CVS is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and WIMFARM SA 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 WIMFARM SA EO 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 WIMFARM SA i.e., WIMFARM SA and CVS Health go up and down completely randomly.

Pair Corralation between WIMFARM SA and CVS Health

Assuming the 90 days horizon WIMFARM SA EO is expected to generate 1.75 times more return on investment than CVS Health. However, WIMFARM SA is 1.75 times more volatile than CVS Health. It trades about -0.01 of its potential returns per unit of risk. CVS Health is currently generating about -0.04 per unit of risk. If you would invest  474.00  in WIMFARM SA EO on September 28, 2024 and sell it today you would lose (159.00) from holding WIMFARM SA EO or give up 33.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WIMFARM SA EO  vs.  CVS Health

WIMFARM SA EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WIMFARM SA EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with WIMFARM SA and CVS Health

The main advantage of trading using opposite WIMFARM SA and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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.

The idea behind WIMFARM SA EO and CVS Health 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.