Correlation Between Telefonica Brasil and CVS Health
Can any of the company-specific risk be diversified away by investing in both Telefonica Brasil 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 Telefonica Brasil and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonica Brasil SA and CVS Health Corp, you can compare the effects of market volatilities on Telefonica Brasil 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 Telefonica Brasil with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonica Brasil and CVS Health.
Diversification Opportunities for Telefonica Brasil and CVS Health
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Telefonica and CVS is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Telefonica Brasil SA 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 Telefonica Brasil 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 Telefonica Brasil SA 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 Telefonica Brasil i.e., Telefonica Brasil and CVS Health go up and down completely randomly.
Pair Corralation between Telefonica Brasil and CVS Health
Considering the 90-day investment horizon Telefonica Brasil SA is expected to under-perform the CVS Health. In addition to that, Telefonica Brasil is 1.05 times more volatile than CVS Health Corp. It trades about -0.07 of its total potential returns per unit of risk. CVS Health Corp is currently generating about -0.07 per unit of volatility. If you would invest 7,230 in CVS Health Corp on January 26, 2024 and sell it today you would lose (453.00) from holding CVS Health Corp or give up 6.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Telefonica Brasil SA vs. CVS Health Corp
Performance |
| Timeline |
| Telefonica Brasil |
| CVS Health Corp |
Telefonica Brasil and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonica Brasil and CVS Health
The main advantage of trading using opposite Telefonica Brasil and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonica Brasil 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.| Telefonica Brasil vs. Orange SA ADR | Telefonica Brasil vs. Vodafone Group PLC | Telefonica Brasil vs. Grupo Televisa SAB | Telefonica Brasil vs. America Movil SAB |
| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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