Correlation Between Ab Global and CVS Health

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Can any of the company-specific risk be diversified away by investing in both Ab Global 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 Ab Global and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global E and CVS Health Corp, you can compare the effects of market volatilities on Ab Global 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 Ab Global with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and CVS Health.

Diversification Opportunities for Ab Global and CVS Health

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between GCEYX and CVS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AB GLOBAL E 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 Ab Global 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 Ab Global E 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 Ab Global i.e., Ab Global and CVS Health go up and down completely randomly.

Pair Corralation between Ab Global and CVS Health

Assuming the 90 days horizon Ab Global E is expected to generate 0.71 times more return on investment than CVS Health. However, Ab Global E is 1.41 times less risky than CVS Health. It trades about 0.03 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.02 per unit of risk. If you would invest  1,470  in Ab Global E on December 30, 2023 and sell it today you would earn a total of  191.00  from holding Ab Global E or generate 12.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

AB GLOBAL E  vs.  CVS Health Corp

 Performance 
       Timeline  
Ab Global E 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ab Global E are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ab Global may actually be approaching a critical reversion point that can send shares even higher in April 2024.
CVS Health Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Ab Global and CVS Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Global and CVS Health

The main advantage of trading using opposite Ab Global and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global 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 Ab Global E 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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