Correlation Between CVS Health and Desarrolladora Homex

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

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

Diversification Opportunities for CVS Health and Desarrolladora Homex

0.54

Correlation Coefficient

CVS Health  Desarrolladora Homex

Very weak diversification

The 3 months correlation between CVS and Desarrolladora is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Desarrolladora Homex SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desarrolladora Homex SAB 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 Desarrolladora Homex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desarrolladora Homex SAB has no effect on the direction of CVS Health i.e., CVS Health and Desarrolladora Homex go up and down completely randomly.

Pair Corralation between CVS Health and Desarrolladora Homex

If you would invest  0.10  in Desarrolladora Homex SAB on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Desarrolladora Homex SAB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

CVS Health  vs.  Desarrolladora Homex SAB

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Desarrolladora Homex SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Desarrolladora Homex SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CVS Health and Desarrolladora Homex

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

The idea behind CVS Health and Desarrolladora Homex SAB 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.