Correlation Between Apple and CVS Health
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CVS Health Corp, you can compare the effects of market volatilities on Apple 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 Apple with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CVS Health.
Diversification Opportunities for Apple and CVS Health
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and CVS is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc 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 Apple 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 Apple Inc 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 Apple i.e., Apple and CVS Health go up and down completely randomly.
Pair Corralation between Apple and CVS Health
Given the investment horizon of 90 days Apple Inc is expected to generate 1.08 times more return on investment than CVS Health. However, Apple is 1.08 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 -0.01 per unit of risk. If you would invest 14,725 in Apple Inc on December 29, 2023 and sell it today you would earn a total of 2,606 from holding Apple Inc or generate 17.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Apple Inc vs. CVS Health Corp
Performance |
Timeline |
Apple Inc |
CVS Health Corp |
Apple and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Apple and CVS Health
The main advantage of trading using opposite Apple and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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. Edwards Lifesciences Corp | CVS Health vs. Spectral AI | CVS Health vs. Microbot Medical | CVS Health vs. Medigus Ltd ADR |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |