Correlation Between Taylor Maritime and CVS Health

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

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

Diversification Opportunities for Taylor Maritime and CVS Health

-0.84

Correlation Coefficient

Taylor Maritime  CVS Health

Pay attention - limited upside

The 3 months correlation between Taylor and CVS is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Maritime Investments and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Taylor Maritime 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 Taylor Maritime Investments 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 Corp has no effect on the direction of Taylor Maritime i.e., Taylor Maritime and CVS Health go up and down completely randomly.

Pair Corralation between Taylor Maritime and CVS Health

Assuming the 90 days trading horizon Taylor Maritime Investments is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Taylor Maritime Investments is 1.69 times less risky than CVS Health. The stock trades about -0.11 of its potential returns per unit of risk. The CVS Health Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,829  in CVS Health Corp on December 2, 2024 and sell it today you would earn a total of  685.00  from holding CVS Health Corp or generate 11.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Taylor Maritime Investments  vs.  CVS Health Corp

Taylor Maritime Inve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taylor Maritime Investments 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVS Health Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVS Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taylor Maritime and CVS Health

The main advantage of trading using opposite Taylor Maritime and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Maritime 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 Taylor Maritime Investments and CVS Health Corp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.