Correlation Between CVS Health and UTD OV

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

By analyzing existing cross correlation between CVS Health and UTD OV BK LOC ADR1, you can compare the effects of market volatilities on CVS Health and UTD OV 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 UTD OV. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and UTD OV.

Diversification Opportunities for CVS Health and UTD OV

-0.16

Correlation Coefficient

CVS Health  UTD OV

Good diversification

The 3 months correlation between CVS and UTD is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and UTD OV BK LOC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTD OV BK 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 UTD OV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTD OV BK has no effect on the direction of CVS Health i.e., CVS Health and UTD OV go up and down completely randomly.

Pair Corralation between CVS Health and UTD OV

Assuming the 90 days trading horizon CVS Health is expected to under-perform the UTD OV. In addition to that, CVS Health is 2.78 times more volatile than UTD OV BK LOC ADR1. It trades about -0.12 of its total potential returns per unit of risk. UTD OV BK LOC ADR1 is currently generating about 0.28 per unit of volatility. If you would invest  4,940  in UTD OV BK LOC ADR1 on September 14, 2024 and sell it today you would earn a total of  260.00  from holding UTD OV BK LOC ADR1 or generate 5.26% return on investment over 90 days.

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

CVS Health  vs.  UTD OV BK LOC ADR1

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 rather sound basic indicators, CVS Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

UTD OV BK

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UTD OV BK LOC ADR1 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental drivers, UTD OV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVS Health and UTD OV

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

The idea behind CVS Health and UTD OV BK LOC ADR1 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..