Correlation Between CVS Health and Regional Health
Can any of the company-specific risk be diversified away by investing in both CVS Health and Regional 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 CVS Health and Regional Health 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 Regional Health Properties, you can compare the effects of market volatilities on CVS Health and Regional 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 CVS Health with a short position of Regional Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Regional Health.
Diversification Opportunities for CVS Health and Regional Health
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and Regional is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Regional Health Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Health Prop 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 Regional Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Health Prop has no effect on the direction of CVS Health i.e., CVS Health and Regional Health go up and down completely randomly.
Pair Corralation between CVS Health and Regional Health
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the Regional Health. In addition to that, CVS Health is 1.06 times more volatile than Regional Health Properties. It trades about -0.2 of its total potential returns per unit of risk. Regional Health Properties is currently generating about 0.2 per unit of volatility. If you would invest 234.00 in Regional Health Properties on February 5, 2024 and sell it today you would earn a total of 58.00 from holding Regional Health Properties or generate 24.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CVS Health Corp vs. Regional Health Properties
Performance |
Timeline |
CVS Health Corp |
Regional Health Prop |
CVS Health and Regional Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and Regional Health
The main advantage of trading using opposite CVS Health and Regional Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Regional 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 Regional Health will offset losses from the drop in Regional Health's long position.CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
Regional Health vs. Ramsay Health Care | Regional Health vs. Jack Nathan Medical | Regional Health vs. Nova Leap Health | Regional Health vs. Fresenius SE Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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