Correlation Between OPERADORA and CVS Health

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

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

Diversification Opportunities for OPERADORA and CVS Health

-0.43

Correlation Coefficient

OPERADORA  CVS Health

Very good diversification

The 3 months correlation between OPERADORA and CVS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding OPERADORA DE SITES and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and OPERADORA 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 OPERADORA DE SITES 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 OPERADORA i.e., OPERADORA and CVS Health go up and down completely randomly.

Pair Corralation between OPERADORA and CVS Health

Assuming the 90 days trading horizon OPERADORA is expected to generate 16.96 times less return on investment than CVS Health. In addition to that, OPERADORA is 2.66 times more volatile than CVS Health. It trades about 0.0 of its total potential returns per unit of risk. CVS Health is currently generating about 0.09 per unit of volatility. If you would invest  116,231  in CVS Health on December 4, 2024 and sell it today you would earn a total of  17,449  from holding CVS Health or generate 15.01% return on investment over 90 days.

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

OPERADORA DE SITES  vs.  CVS Health

OPERADORA DE SITES

Risk-Adjusted Performance

Very Weak

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

CVS Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CVS Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OPERADORA and CVS Health

The main advantage of trading using opposite OPERADORA and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPERADORA 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 OPERADORA DE SITES 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.