Correlation Between CVS Health and Aethlon Medical
Can any of the company-specific risk be diversified away by investing in both CVS Health and Aethlon Medical 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 CVS Health and Aethlon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health Corp and Aethlon Medical, you can compare the effects of market volatilities on CVS Health and Aethlon Medical 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 CVS Health with a short position of Aethlon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Aethlon Medical.
Diversification Opportunities for CVS Health and Aethlon Medical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CVS and Aethlon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Aethlon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aethlon Medical and CVS Health 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 CVS Health Corp are associated (or correlated) with Aethlon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aethlon Medical has no effect on the direction of CVS Health i.e., CVS Health and Aethlon Medical go up and down completely randomly.
Pair Corralation between CVS Health and Aethlon Medical
Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.36 times more return on investment than Aethlon Medical. However, CVS Health Corp is 2.78 times less risky than Aethlon Medical. It trades about -0.1 of its potential returns per unit of risk. Aethlon Medical is currently generating about -0.23 per unit of risk. If you would invest 7,300 in CVS Health Corp on March 5, 2024 and sell it today you would lose (1,340) from holding CVS Health Corp or give up 18.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CVS Health Corp vs. Aethlon Medical
Performance |
Timeline |
CVS Health Corp |
Aethlon Medical |
CVS Health and Aethlon Medical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Aethlon Medical
The main advantage of trading using opposite CVS Health and Aethlon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Aethlon Medical 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 Aethlon Medical will offset losses from the drop in Aethlon Medical's long position.CVS Health vs. Illumina | CVS Health vs. Twist Bioscience Corp | CVS Health vs. Natera Inc | CVS Health vs. Caredx Inc |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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