Correlation Between United Parcel and CVS Health

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

Diversification Opportunities for United Parcel and CVS Health

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between United and CVS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service 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 United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and CVS Health go up and down completely randomly.

Pair Corralation between United Parcel and CVS Health

Considering the 90-day investment horizon United Parcel Service is expected to generate 1.04 times more return on investment than CVS Health. However, United Parcel is 1.04 times more volatile than CVS Health Corp. It trades about -0.01 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.02 per unit of risk. If you would invest  17,268  in United Parcel Service on January 24, 2024 and sell it today you would lose (2,732) from holding United Parcel Service or give up 15.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

United Parcel Service  vs.  CVS Health Corp

 Performance 
       Timeline  
United Parcel Service 

Risk-Adjusted Performance

0 of 100

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

United Parcel and CVS Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Parcel and CVS Health

The main advantage of trading using opposite United Parcel and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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 United Parcel Service 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Share Portfolio
Track or share privately all of your investments from the convenience of any device
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Commodity Directory
Find actively traded commodities issued by global exchanges
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
AI Investment Finder
Use AI to screen and filter profitable investment opportunities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.