Correlation Between Canso Credit and CVS HEALTH

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

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

Diversification Opportunities for Canso Credit and CVS HEALTH

-0.77

Correlation Coefficient

Canso Credit  CVS HEALTH

Pay attention - limited upside

The 3 months correlation between Canso and CVS is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust 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 Canso Credit 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 Canso Credit Trust 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 Canso Credit i.e., Canso Credit and CVS HEALTH go up and down completely randomly.

Pair Corralation between Canso Credit and CVS HEALTH

Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.24 times more return on investment than CVS HEALTH. However, Canso Credit Trust is 4.11 times less risky than CVS HEALTH. It trades about 0.08 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.05 per unit of risk. If you would invest  1,322  in Canso Credit Trust on October 10, 2024 and sell it today you would earn a total of  263.00  from holding Canso Credit Trust or generate 19.89% return on investment over 90 days.

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

Canso Credit Trust  vs.  CVS HEALTH CDR

Canso Credit Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canso Credit and CVS HEALTH

The main advantage of trading using opposite Canso Credit and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit 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 Canso Credit Trust 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 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.