Correlation Between CVS Health and Peoples Insurance
Can any of the company-specific risk be diversified away by investing in both CVS Health and Peoples Insurance 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 Peoples Insurance 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 The Peoples Insurance, you can compare the effects of market volatilities on CVS Health and Peoples Insurance 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 Peoples Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Peoples Insurance.
Diversification Opportunities for CVS Health and Peoples Insurance
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVS and Peoples is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and The Peoples Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Insurance 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 Peoples Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Insurance has no effect on the direction of CVS Health i.e., CVS Health and Peoples Insurance go up and down completely randomly.
Pair Corralation between CVS Health and Peoples Insurance
Assuming the 90 days horizon CVS Health Corp is expected to under-perform the Peoples Insurance. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 3.18 times less risky than Peoples Insurance. The stock trades about -0.29 of its potential returns per unit of risk. The The Peoples Insurance is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 26.00 in The Peoples Insurance on January 20, 2024 and sell it today you would earn a total of 1.00 from holding The Peoples Insurance or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health Corp vs. The Peoples Insurance
Performance |
| Timeline |
| CVS Health Corp |
| Peoples Insurance |
CVS Health and Peoples Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and Peoples Insurance
The main advantage of trading using opposite CVS Health and Peoples Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Peoples Insurance 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 Peoples Insurance will offset losses from the drop in Peoples Insurance's long position.| CVS Health vs. Superior Plus Corp | CVS Health vs. Origin Agritech | CVS Health vs. Identiv | CVS Health vs. INTUITIVE SURGICAL |
| Peoples Insurance vs. Superior Plus Corp | Peoples Insurance vs. Origin Agritech | Peoples Insurance vs. SIVERS SEMICONDUCTORS AB | Peoples Insurance vs. NorAm Drilling AS |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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