Correlation Between Alleghany and CVS Health
Can any of the company-specific risk be diversified away by investing in both Alleghany 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 Alleghany and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alleghany and CVS Health Corp, you can compare the effects of market volatilities on Alleghany 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 Alleghany with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alleghany and CVS Health.
Diversification Opportunities for Alleghany and CVS Health
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alleghany and CVS is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alleghany 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 Alleghany 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 Alleghany 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 Alleghany i.e., Alleghany and CVS Health go up and down completely randomly.
Pair Corralation between Alleghany and CVS Health
If you would invest 84,779 in Alleghany on January 23, 2024 and sell it today you would earn a total of 0.00 from holding Alleghany or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.54% |
| Values | Daily Returns |
Alleghany vs. CVS Health Corp
Performance |
| Timeline |
| Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CVS Health Corp |
Alleghany and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alleghany and CVS Health
The main advantage of trading using opposite Alleghany and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alleghany 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.| Alleghany vs. AerSale Corp | Alleghany vs. Valhi Inc | Alleghany vs. Grupo Aeroportuario del | Alleghany vs. Fair Isaac |
| 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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