Correlation Between Highwood Asset and CVS HEALTH

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

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

Diversification Opportunities for Highwood Asset and CVS HEALTH

0.12

Correlation Coefficient

Highwood Asset  CVS HEALTH

Average diversification

The 3 months correlation between Highwood and CVS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Highwood Asset Management and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Highwood Asset 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 Highwood Asset Management 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 CDR has no effect on the direction of Highwood Asset i.e., Highwood Asset and CVS HEALTH go up and down completely randomly.

Pair Corralation between Highwood Asset and CVS HEALTH

Assuming the 90 days horizon Highwood Asset Management is expected to generate 1.97 times more return on investment than CVS HEALTH. However, Highwood Asset is 1.97 times more volatile than CVS HEALTH CDR. It trades about -0.02 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.06 per unit of risk. If you would invest  1,125  in Highwood Asset Management on September 20, 2024 and sell it today you would lose (549.00) from holding Highwood Asset Management or give up 48.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Highwood Asset Management  vs.  CVS HEALTH CDR

Highwood Asset Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Highwood Asset and CVS HEALTH

The main advantage of trading using opposite Highwood Asset and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwood Asset 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 Highwood Asset Management and CVS HEALTH CDR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.