Correlation Between National Bank and CVS Health
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and CVS Health Corp, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and CVS Health.
Diversification Opportunities for National Bank and CVS Health
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and CVS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings 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 National Bank 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 National Bank Holdings 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 National Bank i.e., National Bank and CVS Health go up and down completely randomly.
Pair Corralation between National Bank and CVS Health
Assuming the 90 days horizon National Bank Holdings is expected to generate 0.56 times more return on investment than CVS Health. However, National Bank Holdings is 1.77 times less risky than CVS Health. It trades about 0.07 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.08 per unit of risk. If you would invest 3,093 in National Bank Holdings on March 12, 2024 and sell it today you would earn a total of 207.00 from holding National Bank Holdings or generate 6.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
National Bank Holdings vs. CVS Health Corp
Performance |
Timeline |
National Bank Holdings |
CVS Health Corp |
National Bank and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with National Bank and CVS Health
The main advantage of trading using opposite National Bank and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.National Bank vs. Regions Financial | National Bank vs. NMI Holdings | National Bank vs. Origin Agritech | National Bank vs. SIVERS SEMICONDUCTORS AB |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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