Correlation Between Carlsberg and CVS Health
Can any of the company-specific risk be diversified away by investing in both Carlsberg 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 Carlsberg and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlsberg AS and CVS Health Corp, you can compare the effects of market volatilities on Carlsberg 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 Carlsberg with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlsberg and CVS Health.
Diversification Opportunities for Carlsberg and CVS Health
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carlsberg and CVS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carlsberg AS 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 Carlsberg 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 Carlsberg AS 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 Carlsberg i.e., Carlsberg and CVS Health go up and down completely randomly.
Pair Corralation between Carlsberg and CVS Health
Assuming the 90 days trading horizon Carlsberg AS is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Carlsberg AS is 1.41 times less risky than CVS Health. The stock trades about -0.04 of its potential returns per unit of risk. The CVS Health Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,371 in CVS Health Corp on December 30, 2023 and sell it today you would earn a total of 605.00 from holding CVS Health Corp or generate 8.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
Carlsberg AS vs. CVS Health Corp
Performance |
Timeline |
Carlsberg AS |
CVS Health Corp |
Carlsberg and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carlsberg and CVS Health
The main advantage of trading using opposite Carlsberg and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlsberg 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.Carlsberg vs. PARKEN Sport Entertainment | Carlsberg vs. Kreditbanken AS | Carlsberg vs. North Media AS | Carlsberg vs. BankInvestEuropiske Akt Ansv |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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