Correlation Between CVS HEALTH and Jamieson Wellness

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

By analyzing existing cross correlation between CVS HEALTH CDR and Jamieson Wellness, you can compare the effects of market volatilities on CVS HEALTH and Jamieson Wellness 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 Jamieson Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Jamieson Wellness.

Diversification Opportunities for CVS HEALTH and Jamieson Wellness

-0.08

Correlation Coefficient

CVS HEALTH  Jamieson Wellness

Good diversification

The 3 months correlation between CVS and Jamieson is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Jamieson Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jamieson Wellness 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 CDR are associated (or correlated) with Jamieson Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jamieson Wellness has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Jamieson Wellness go up and down completely randomly.

Pair Corralation between CVS HEALTH and Jamieson Wellness

Assuming the 90 days trading horizon CVS HEALTH CDR is expected to under-perform the Jamieson Wellness. In addition to that, CVS HEALTH is 1.86 times more volatile than Jamieson Wellness. It trades about -0.26 of its total potential returns per unit of risk. Jamieson Wellness is currently generating about 0.2 per unit of volatility. If you would invest  3,504  in Jamieson Wellness on September 17, 2024 and sell it today you would earn a total of  170.00  from holding Jamieson Wellness or generate 4.85% return on investment over 90 days.

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

CVS HEALTH CDR  vs.  Jamieson Wellness

CVS HEALTH CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS HEALTH CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Jamieson Wellness

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jamieson Wellness are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Jamieson Wellness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CVS HEALTH and Jamieson Wellness

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

The idea behind CVS HEALTH CDR and Jamieson Wellness 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.