Correlation Between KSM Mutual and CVS Health

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both KSM Mutual 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 KSM Mutual and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KSM Mutual Funds and CVS Health Corp, you can compare the effects of market volatilities on KSM Mutual 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 KSM Mutual with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of KSM Mutual and CVS Health.

Diversification Opportunities for KSM Mutual and CVS Health

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between KSM and CVS is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding KSM Mutual Funds 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 KSM Mutual 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 KSM Mutual Funds 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 KSM Mutual i.e., KSM Mutual and CVS Health go up and down completely randomly.

Pair Corralation between KSM Mutual and CVS Health

Assuming the 90 days trading horizon KSM Mutual is expected to generate 60.0 times less return on investment than CVS Health. But when comparing it to its historical volatility, KSM Mutual Funds is 6.07 times less risky than CVS Health. It trades about 0.02 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,627  in CVS Health Corp on December 29, 2023 and sell it today you would earn a total of  349.00  from holding CVS Health Corp or generate 4.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy78.26%
ValuesDaily Returns

KSM Mutual Funds  vs.  CVS Health Corp

 Performance 
       Timeline  
KSM Mutual Funds 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days KSM Mutual Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, KSM Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
CVS Health Corp 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

KSM Mutual and CVS Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with KSM Mutual and CVS Health

The main advantage of trading using opposite KSM Mutual and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KSM Mutual 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 KSM Mutual Funds 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Global Correlations
Find global opportunities by holding instruments from different markets