Correlation Between Mako Mining and CVS HEALTH

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

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

Diversification Opportunities for Mako Mining and CVS HEALTH

0.02

Correlation Coefficient

Mako Mining  CVS HEALTH

Significant diversification

The 3 months correlation between Mako and CVS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mako Mining Corp 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 Mako Mining 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 Mako Mining Corp 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 Mako Mining i.e., Mako Mining and CVS HEALTH go up and down completely randomly.

Pair Corralation between Mako Mining and CVS HEALTH

Assuming the 90 days horizon Mako Mining is expected to generate 1.21 times less return on investment than CVS HEALTH. In addition to that, Mako Mining is 2.01 times more volatile than CVS HEALTH CDR. It trades about 0.2 of its total potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.49 per unit of volatility. If you would invest  1,100  in CVS HEALTH CDR on October 24, 2024 and sell it today you would earn a total of  218.00  from holding CVS HEALTH CDR or generate 19.82% return on investment over 90 days.

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

Mako Mining Corp  vs.  CVS HEALTH CDR

Mako Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mako Mining 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 very healthy basic indicators, CVS HEALTH is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mako Mining and CVS HEALTH

The main advantage of trading using opposite Mako Mining and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mako Mining 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 Mako Mining Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.