Correlation Between Healthpeak Properties and CVS Health

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

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

Diversification Opportunities for Healthpeak Properties and CVS Health

-0.26

Correlation Coefficient

Healthpeak Properties  CVS Health

Very good diversification

The 3 months correlation between Healthpeak and CVS is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Healthpeak Properties 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 Healthpeak Properties 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 Healthpeak Properties i.e., Healthpeak Properties and CVS Health go up and down completely randomly.

Pair Corralation between Healthpeak Properties and CVS Health

Assuming the 90 days trading horizon Healthpeak Properties is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Healthpeak Properties is 3.93 times less risky than CVS Health. The stock trades about -0.18 of its potential returns per unit of risk. The CVS Health is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,296  in CVS Health on December 1, 2024 and sell it today you would earn a total of  551.00  from holding CVS Health or generate 16.72% return on investment over 90 days.

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

Healthpeak Properties  vs.  CVS Health

Healthpeak Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CVS Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CVS Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthpeak Properties and CVS Health

The main advantage of trading using opposite Healthpeak Properties and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthpeak Properties 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 Healthpeak Properties 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.