Correlation Between CVS Health and ProShares Ultra
Can any of the company-specific risk be diversified away by investing in both CVS Health and ProShares Ultra 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 CVS Health and ProShares Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and ProShares Ultra Bloomberg, you can compare the effects of market volatilities on CVS Health and ProShares Ultra 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 CVS Health with a short position of ProShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and ProShares Ultra.
Diversification Opportunities for CVS Health and ProShares Ultra
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and ProShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and ProShares Ultra Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Bloomberg and CVS Health 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 CVS Health Corp are associated (or correlated) with ProShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Bloomberg has no effect on the direction of CVS Health i.e., CVS Health and ProShares Ultra go up and down completely randomly.
Pair Corralation between CVS Health and ProShares Ultra
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.2 times more return on investment than ProShares Ultra. However, CVS Health Corp is 4.95 times less risky than ProShares Ultra. It trades about -0.03 of its potential returns per unit of risk. ProShares Ultra Bloomberg is currently generating about -0.08 per unit of risk. If you would invest 9,120 in CVS Health Corp on January 19, 2024 and sell it today you would lose (2,181) from holding CVS Health Corp or give up 23.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. ProShares Ultra Bloomberg
Performance |
| Timeline |
| CVS Health Corp |
| ProShares Ultra Bloomberg |
CVS Health and ProShares Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and ProShares Ultra
The main advantage of trading using opposite CVS Health and ProShares Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, ProShares Ultra 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 ProShares Ultra will offset losses from the drop in ProShares Ultra's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
| ProShares Ultra vs. Drum Income Plus | ProShares Ultra vs. EA Series Trust | ProShares Ultra vs. Global X MLP | ProShares Ultra vs. ETRACS Quarterly Pay |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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