Correlation Between WhiteSmoke Software and CVS Health
Can any of the company-specific risk be diversified away by investing in both WhiteSmoke Software 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 WhiteSmoke Software and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WhiteSmoke Software and CVS Health Corp, you can compare the effects of market volatilities on WhiteSmoke Software 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 WhiteSmoke Software with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of WhiteSmoke Software and CVS Health.
Diversification Opportunities for WhiteSmoke Software and CVS Health
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WhiteSmoke and CVS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding WhiteSmoke Software 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 WhiteSmoke Software 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 WhiteSmoke Software 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 WhiteSmoke Software i.e., WhiteSmoke Software and CVS Health go up and down completely randomly.
Pair Corralation between WhiteSmoke Software and CVS Health
Assuming the 90 days trading horizon WhiteSmoke Software is expected to generate 5.78 times more return on investment than CVS Health. However, WhiteSmoke Software is 5.78 times more volatile than CVS Health Corp. It trades about 0.03 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 15,500 in WhiteSmoke Software on January 26, 2024 and sell it today you would lose (5,450) from holding WhiteSmoke Software or give up 35.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 79.15% |
| Values | Daily Returns |
WhiteSmoke Software vs. CVS Health Corp
Performance |
| Timeline |
| WhiteSmoke Software |
| CVS Health Corp |
WhiteSmoke Software and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WhiteSmoke Software and CVS Health
The main advantage of trading using opposite WhiteSmoke Software and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WhiteSmoke Software 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 WhiteSmoke Software 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.| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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