Correlation Between DNA Biomed and CVS Health
Can any of the company-specific risk be diversified away by investing in both DNA Biomed 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 DNA Biomed and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DNA Biomed Solns and CVS Health Corp, you can compare the effects of market volatilities on DNA Biomed 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 DNA Biomed with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNA Biomed and CVS Health.
Diversification Opportunities for DNA Biomed and CVS Health
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DNA and CVS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding DNA Biomed Solns 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 DNA Biomed 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 DNA Biomed Solns 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 DNA Biomed i.e., DNA Biomed and CVS Health go up and down completely randomly.
Pair Corralation between DNA Biomed and CVS Health
Assuming the 90 days trading horizon DNA Biomed Solns is expected to generate 3.0 times more return on investment than CVS Health. However, DNA Biomed is 3.0 times more volatile than CVS Health Corp. It trades about 0.13 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.07 per unit of risk. If you would invest 6,940 in DNA Biomed Solns on January 26, 2024 and sell it today you would earn a total of 1,800 from holding DNA Biomed Solns or generate 25.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 77.42% |
Values | Daily Returns |
DNA Biomed Solns vs. CVS Health Corp
Performance |
Timeline |
DNA Biomed Solns |
CVS Health Corp |
DNA Biomed and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with DNA Biomed and CVS Health
The main advantage of trading using opposite DNA Biomed and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNA Biomed 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.The idea behind DNA Biomed Solns and CVS Health Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |