Correlation Between CVS HEALTH and Rogers Communications

Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Rogers Communications 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 Rogers Communications 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 Rogers Communications, you can compare the effects of market volatilities on CVS HEALTH and Rogers Communications 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Rogers Communications.

Diversification Opportunities for CVS HEALTH and Rogers Communications

0.62

Correlation Coefficient

CVS HEALTH  Rogers Communications

Poor diversification

The 3 months correlation between CVS and Rogers is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Rogers Communications go up and down completely randomly.

Pair Corralation between CVS HEALTH and Rogers Communications

Assuming the 90 days trading horizon CVS HEALTH CDR is expected to under-perform the Rogers Communications. In addition to that, CVS HEALTH is 1.99 times more volatile than Rogers Communications. It trades about -0.07 of its total potential returns per unit of risk. Rogers Communications is currently generating about -0.13 per unit of volatility. If you would invest  5,606  in Rogers Communications on September 17, 2024 and sell it today you would lose (606.00) from holding Rogers Communications or give up 10.81% of portfolio value over 90 days.

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

CVS HEALTH CDR  vs.  Rogers Communications

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.

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CVS HEALTH and Rogers Communications

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

The idea behind CVS HEALTH CDR and Rogers Communications 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.