Correlation Between Nordon Indstrias and CVS Health

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

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

Diversification Opportunities for Nordon Indstrias and CVS Health

-0.32

Correlation Coefficient

Nordon Indstrias  CVS Health

Very good diversification

The 3 months correlation between Nordon and CVS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Nordon Indstrias i.e., Nordon Indstrias and CVS Health go up and down completely randomly.

Pair Corralation between Nordon Indstrias and CVS Health

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to under-perform the CVS Health. In addition to that, Nordon Indstrias is 1.42 times more volatile than CVS Health. It trades about -0.21 of its total potential returns per unit of risk. CVS Health is currently generating about -0.02 per unit of volatility. If you would invest  3,180  in CVS Health on September 14, 2024 and sell it today you would lose (204.00) from holding CVS Health or give up 6.42% of portfolio value over 90 days.

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

Nordon Indstrias Metalrgicas  vs.  CVS Health

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nordon Indstrias and CVS Health

The main advantage of trading using opposite Nordon Indstrias and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordon Indstrias 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 Nordon Indstrias Metalrgicas 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.