Correlation Between Vail Resorts and CVS Health
Can any of the company-specific risk be diversified away by investing in both Vail Resorts 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 Vail Resorts and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vail Resorts and CVS Health Corp, you can compare the effects of market volatilities on Vail Resorts 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 Vail Resorts with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vail Resorts and CVS Health.
Diversification Opportunities for Vail Resorts and CVS Health
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vail and CVS is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts 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 Vail Resorts 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 Vail Resorts 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 Vail Resorts i.e., Vail Resorts and CVS Health go up and down completely randomly.
Pair Corralation between Vail Resorts and CVS Health
Considering the 90-day investment horizon Vail Resorts is expected to generate 0.67 times more return on investment than CVS Health. However, Vail Resorts is 1.49 times less risky than CVS Health. It trades about -0.17 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.32 per unit of risk. If you would invest 22,415 in Vail Resorts on January 20, 2024 and sell it today you would lose (1,053) from holding Vail Resorts or give up 4.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vail Resorts vs. CVS Health Corp
Performance |
| Timeline |
| Vail Resorts |
| CVS Health Corp |
Vail Resorts and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vail Resorts and CVS Health
The main advantage of trading using opposite Vail Resorts and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vail Resorts 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.| Vail Resorts vs. Marriot Vacations Worldwide | Vail Resorts vs. Monarch Casino Resort | Vail Resorts vs. Studio City International | Vail Resorts vs. Hilton Grand Vacations |
| CVS Health vs. Certara | CVS Health vs. HealthStream | CVS Health vs. HealthEquity | CVS Health vs. Evolent Health |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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