Correlation Between CVS Health and Magellan Health
Can any of the company-specific risk be diversified away by investing in both CVS Health and Magellan 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 Magellan 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 Magellan Health, you can compare the effects of market volatilities on CVS Health and Magellan 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 Magellan Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Magellan Health.
Diversification Opportunities for CVS Health and Magellan Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CVS and Magellan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Magellan Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Health 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 Magellan Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Health has no effect on the direction of CVS Health i.e., CVS Health and Magellan Health go up and down completely randomly.
Pair Corralation between CVS Health and Magellan Health
If you would invest (100.00) in Magellan Health on January 17, 2024 and sell it today you would earn a total of 100.00 from holding Magellan Health or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
CVS Health Corp vs. Magellan Health
Performance |
| Timeline |
| CVS Health Corp |
| Magellan Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CVS Health and Magellan Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Magellan Health
The main advantage of trading using opposite CVS Health and Magellan Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Magellan 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 Magellan Health will offset losses from the drop in Magellan Health's long position.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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