Correlation Between Admiral Group and CVS Health
Can any of the company-specific risk be diversified away by investing in both Admiral Group 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 Admiral Group and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group plc and CVS Health Corp, you can compare the effects of market volatilities on Admiral Group 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 Admiral Group with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and CVS Health.
Diversification Opportunities for Admiral Group and CVS Health
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Admiral and CVS is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group plc 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 Admiral Group 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 Admiral Group plc 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 Admiral Group i.e., Admiral Group and CVS Health go up and down completely randomly.
Pair Corralation between Admiral Group and CVS Health
Assuming the 90 days horizon Admiral Group plc is expected to generate 0.9 times more return on investment than CVS Health. However, Admiral Group plc is 1.11 times less risky than CVS Health. It trades about 0.1 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.0 per unit of risk. If you would invest 2,422 in Admiral Group plc on January 26, 2024 and sell it today you would earn a total of 955.00 from holding Admiral Group plc or generate 39.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group plc vs. CVS Health Corp
Performance |
| Timeline |
| Admiral Group plc |
| CVS Health Corp |
Admiral Group and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and CVS Health
The main advantage of trading using opposite Admiral Group and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group 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.| Admiral Group vs. Root Inc | Admiral Group vs. Walt Disney | Admiral Group vs. Coupang LLC | Admiral Group vs. Geron |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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