Correlation Between Cencora and CAVA Group,

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

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

Diversification Opportunities for Cencora and CAVA Group,

0.75

Correlation Coefficient

Cencora  CAVA Group,

Poor diversification

The 3 months correlation between Cencora and CAVA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cencora and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA Group, and Cencora 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 Cencora are associated (or correlated) with CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of Cencora i.e., Cencora and CAVA Group, go up and down completely randomly.

Pair Corralation between Cencora and CAVA Group,

Considering the 90-day investment horizon Cencora is expected to under-perform the CAVA Group,. But the stock apears to be less risky and, when comparing its historical volatility, Cencora is 1.97 times less risky than CAVA Group,. The stock trades about -0.04 of its potential returns per unit of risk. The CAVA Group, is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12,285  in CAVA Group, on September 16, 2024 and sell it today you would earn a total of  120.00  from holding CAVA Group, or generate 0.98% return on investment over 90 days.

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

Cencora  vs.  CAVA Group,

Cencora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cencora has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cencora and CAVA Group,

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

The idea behind Cencora and CAVA Group, 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..