Correlation Between Lupatech and CVS Health
Can any of the company-specific risk be diversified away by investing in both Lupatech 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 Lupatech and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and CVS Health Corp, you can compare the effects of market volatilities on Lupatech 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 Lupatech with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and CVS Health.
Diversification Opportunities for Lupatech and CVS Health
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lupatech and CVS is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA 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 Lupatech 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 Lupatech SA 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 Lupatech i.e., Lupatech and CVS Health go up and down completely randomly.
Pair Corralation between Lupatech and CVS Health
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the CVS Health. In addition to that, Lupatech is 2.9 times more volatile than CVS Health Corp. It trades about -0.02 of its total potential returns per unit of risk. CVS Health Corp is currently generating about -0.02 per unit of volatility. If you would invest 10,062 in CVS Health Corp on December 29, 2023 and sell it today you would lose (2,119) from holding CVS Health Corp or give up 21.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.39% |
Values | Daily Returns |
Lupatech SA vs. CVS Health Corp
Performance |
Timeline |
Lupatech SA |
CVS Health Corp |
Lupatech and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lupatech and CVS Health
The main advantage of trading using opposite Lupatech and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech 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.Lupatech vs. Verizon Communications | Lupatech vs. Tyson Foods | Lupatech vs. Ross Stores | Lupatech vs. Tres Tentos Agroindustrial |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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