Correlation Between DISTRICT METALS and CVS Health

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

By analyzing existing cross correlation between DISTRICT METALS and CVS Health, you can compare the effects of market volatilities on DISTRICT METALS and CVS Health 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 DISTRICT METALS with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DISTRICT METALS and CVS Health.

Diversification Opportunities for DISTRICT METALS and CVS Health

-0.54

Correlation Coefficient

DISTRICT METALS  CVS Health

Excellent diversification

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

Pair Corralation between DISTRICT METALS and CVS Health

Assuming the 90 days trading horizon DISTRICT METALS is expected to under-perform the CVS Health. In addition to that, DISTRICT METALS is 1.41 times more volatile than CVS Health. It trades about -0.09 of its total potential returns per unit of risk. CVS Health is currently generating about 0.25 per unit of volatility. 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

DISTRICT METALS  vs.  CVS Health

DISTRICT METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DISTRICT METALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CVS Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CVS Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DISTRICT METALS and CVS Health

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

The idea behind DISTRICT METALS and CVS Health 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.