Correlation Between Gabriel Holding and CVS Health

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Can any of the company-specific risk be diversified away by investing in both Gabriel Holding 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 Gabriel Holding and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gabriel Holding and CVS Health Corp, you can compare the effects of market volatilities on Gabriel Holding 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 Gabriel Holding with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gabriel Holding and CVS Health.

Diversification Opportunities for Gabriel Holding and CVS Health

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Gabriel and CVS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gabriel Holding 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 Gabriel Holding 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 Gabriel Holding 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 Gabriel Holding i.e., Gabriel Holding and CVS Health go up and down completely randomly.

Pair Corralation between Gabriel Holding and CVS Health

Assuming the 90 days trading horizon Gabriel Holding is expected to generate 1.4 times more return on investment than CVS Health. However, Gabriel Holding is 1.4 times more volatile than CVS Health Corp. It trades about 0.14 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.36 per unit of risk. If you would invest  25,000  in Gabriel Holding on January 26, 2024 and sell it today you would earn a total of  1,600  from holding Gabriel Holding or generate 6.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy90.48%
ValuesDaily Returns

Gabriel Holding  vs.  CVS Health Corp

 Performance 
       Timeline  
Gabriel Holding 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Gabriel Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Gabriel Holding may actually be approaching a critical reversion point that can send shares even higher in May 2024.
CVS Health Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gabriel Holding and CVS Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gabriel Holding and CVS Health

The main advantage of trading using opposite Gabriel Holding and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabriel Holding 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 Gabriel Holding 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.
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.

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