Correlation Between CVS Health and QUEEN S

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

By analyzing existing cross correlation between CVS Health and QUEEN S ROAD, you can compare the effects of market volatilities on CVS Health and QUEEN S 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 QUEEN S. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and QUEEN S.

Diversification Opportunities for CVS Health and QUEEN S

-0.22

Correlation Coefficient

CVS Health  QUEEN S

Very good diversification

The 3 months correlation between CVS and QUEEN is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and QUEEN S ROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUEEN S ROAD 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 are associated (or correlated) with QUEEN S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUEEN S ROAD has no effect on the direction of CVS Health i.e., CVS Health and QUEEN S go up and down completely randomly.

Pair Corralation between CVS Health and QUEEN S

Assuming the 90 days trading horizon CVS Health is expected to generate 1.23 times more return on investment than QUEEN S. However, CVS Health is 1.23 times more volatile than QUEEN S ROAD. It trades about 0.26 of its potential returns per unit of risk. QUEEN S ROAD is currently generating about -0.14 per unit of risk. If you would invest  4,184  in CVS Health on December 20, 2024 and sell it today you would earn a total of  2,059  from holding CVS Health or generate 49.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

CVS Health  vs.  QUEEN S ROAD

CVS Health

Risk-Adjusted Performance

Solid

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

QUEEN S ROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days QUEEN S ROAD 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CVS Health and QUEEN S

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

The idea behind CVS Health and QUEEN S ROAD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.