Correlation Between CVS Health and Pick N
Can any of the company-specific risk be diversified away by investing in both CVS Health and Pick N 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 Pick N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and Pick n Pay, you can compare the effects of market volatilities on CVS Health and Pick N 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 Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Pick N.
Diversification Opportunities for CVS Health and Pick N
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVS and Pick is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of CVS Health i.e., CVS Health and Pick N go up and down completely randomly.
Pair Corralation between CVS Health and Pick N
Assuming the 90 days trading horizon CVS Health is expected to generate 1.08 times more return on investment than Pick N. However, CVS Health is 1.08 times more volatile than Pick n Pay. It trades about 0.25 of its potential returns per unit of risk. Pick n Pay is currently generating about -0.04 per unit of risk. If you would invest 4,188 in CVS Health on December 27, 2024 and sell it today you would earn a total of 2,039 from holding CVS Health or generate 48.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVS Health vs. Pick n Pay
Performance |
Timeline |
CVS Health |
Pick n Pay |
CVS Health and Pick N Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Pick N
The main advantage of trading using opposite CVS Health and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Pick N 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 Pick N will offset losses from the drop in Pick N's long position.CVS Health vs. MSAD INSURANCE | CVS Health vs. Zurich Insurance Group | CVS Health vs. UNIQA INSURANCE GR | CVS Health vs. Sabre Insurance Group |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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