Correlation Between Vanguard Value and CVS Health
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Vanguard Value and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and CVS Health Corp, you can compare the effects of market volatilities on Vanguard Value 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 Vanguard Value with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and CVS Health.
Diversification Opportunities for Vanguard Value and CVS Health
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vanguard and CVS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index 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 Vanguard Value 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 Vanguard Value Index 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 Vanguard Value i.e., Vanguard Value and CVS Health go up and down completely randomly.
Pair Corralation between Vanguard Value and CVS Health
Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.42 times more return on investment than CVS Health. However, Vanguard Value Index is 2.36 times less risky than CVS Health. It trades about 0.13 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.04 per unit of risk. If you would invest 5,853 in Vanguard Value Index on January 25, 2024 and sell it today you would earn a total of 274.00 from holding Vanguard Value Index or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Vanguard Value Index vs. CVS Health Corp
Performance |
| Timeline |
| Vanguard Value Index |
| CVS Health Corp |
Vanguard Value and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and CVS Health
The main advantage of trading using opposite Vanguard Value and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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.| Vanguard Value vs. Valic Company I | Vanguard Value vs. Victory Rs Partners | Vanguard Value vs. Small Cap Value | Vanguard Value vs. Ab Discovery Value |
| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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