Correlation Between CVS Health and Intel
Can any of the company-specific risk be diversified away by investing in both CVS Health and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on CVS Health and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Intel.
Diversification Opportunities for CVS Health and Intel
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CVS and Intel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of CVS Health i.e., CVS Health and Intel go up and down completely randomly.
Pair Corralation between CVS Health and Intel
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.57 times more return on investment than Intel. However, CVS Health Corp is 1.75 times less risky than Intel. It trades about -0.14 of its potential returns per unit of risk. Intel is currently generating about -0.21 per unit of risk. If you would invest 7,631 in CVS Health Corp on January 20, 2024 and sell it today you would lose (692.00) from holding CVS Health Corp or give up 9.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVS Health Corp vs. Intel
Performance |
Timeline |
CVS Health Corp |
Intel |
CVS Health and Intel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Intel
The main advantage of trading using opposite CVS Health and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.CVS Health vs. Certara | CVS Health vs. HealthStream | CVS Health vs. Evolent Health | CVS Health vs. Streamline Health Solutions |
Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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