Correlation Between Israel Discount and CVS Health
Can any of the company-specific risk be diversified away by investing in both Israel Discount 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 Israel Discount and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Israel Discount Bank and CVS Health Corp, you can compare the effects of market volatilities on Israel Discount 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 Israel Discount with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Discount and CVS Health.
Diversification Opportunities for Israel Discount and CVS Health
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Israel and CVS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Israel Discount Bank 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 Israel Discount 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 Israel Discount Bank 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 Israel Discount i.e., Israel Discount and CVS Health go up and down completely randomly.
Pair Corralation between Israel Discount and CVS Health
Assuming the 90 days trading horizon Israel Discount is expected to generate 1.23 times less return on investment than CVS Health. In addition to that, Israel Discount is 1.39 times more volatile than CVS Health Corp. It trades about 0.02 of its total potential returns per unit of risk. CVS Health Corp is currently generating about 0.03 per unit of volatility. If you would invest 6,577 in CVS Health Corp on January 24, 2024 and sell it today you would earn a total of 386.00 from holding CVS Health Corp or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.07% |
| Values | Daily Returns |
Israel Discount Bank vs. CVS Health Corp
Performance |
| Timeline |
| Israel Discount Bank |
| CVS Health Corp |
Israel Discount and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Israel Discount and CVS Health
The main advantage of trading using opposite Israel Discount and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Discount 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.| Israel Discount vs. Bank Leumi Le Israel | Israel Discount vs. Bank Hapoalim | Israel Discount vs. Mizrahi Tefahot | Israel Discount vs. Bezeq Israeli Telecommunication |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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