Correlation Between Avrupa Minerals and CVS HEALTH

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

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

Diversification Opportunities for Avrupa Minerals and CVS HEALTH

-0.5

Correlation Coefficient

Avrupa Minerals  CVS HEALTH

Very good diversification

The 3 months correlation between Avrupa and CVS is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Avrupa Minerals 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 Avrupa Minerals 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 Avrupa Minerals 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 Avrupa Minerals i.e., Avrupa Minerals and CVS HEALTH go up and down completely randomly.

Pair Corralation between Avrupa Minerals and CVS HEALTH

Assuming the 90 days horizon Avrupa Minerals is expected to under-perform the CVS HEALTH. In addition to that, Avrupa Minerals is 3.59 times more volatile than CVS HEALTH CDR. It trades about -0.01 of its total potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.28 per unit of volatility. If you would invest  1,091  in CVS HEALTH CDR on December 20, 2024 and sell it today you would earn a total of  586.00  from holding CVS HEALTH CDR or generate 53.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Avrupa Minerals  vs.  CVS HEALTH CDR

Avrupa Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avrupa Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Avrupa Minerals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CVS HEALTH CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS HEALTH CDR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CVS HEALTH displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avrupa Minerals and CVS HEALTH

The main advantage of trading using opposite Avrupa Minerals and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avrupa Minerals 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 Avrupa Minerals and CVS HEALTH CDR 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 Correlations module to find global opportunities by holding instruments from different markets.