Correlation Between Fluor and CVS Health

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

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

Diversification Opportunities for Fluor and CVS Health

0.0

Correlation Coefficient

Fluor  CVS Health

Pay attention - limited upside

The 3 months correlation between Fluor and CVS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fluor and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Fluor 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 Fluor 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 Fluor i.e., Fluor and CVS Health go up and down completely randomly.

Pair Corralation between Fluor and CVS Health

If you would invest  89,469  in CVS Health on December 28, 2024 and sell it today you would earn a total of  47,131  from holding CVS Health or generate 52.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Fluor  vs.  CVS Health

Fluor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fluor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 fairly weak basic indicators, CVS Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluor and CVS Health

The main advantage of trading using opposite Fluor and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluor 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 Fluor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.