Correlation Between CVS Health and UFP Technologies
Can any of the company-specific risk be diversified away by investing in both CVS Health and UFP Technologies 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 UFP Technologies 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 UFP Technologies, you can compare the effects of market volatilities on CVS Health and UFP Technologies 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 UFP Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and UFP Technologies.
Diversification Opportunities for CVS Health and UFP Technologies
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVS and UFP is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and UFP Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Technologies 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 UFP Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFP Technologies has no effect on the direction of CVS Health i.e., CVS Health and UFP Technologies go up and down completely randomly.
Pair Corralation between CVS Health and UFP Technologies
Considering the 90-day investment horizon CVS Health Corp is expected to under-perform the UFP Technologies. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health Corp is 1.28 times less risky than UFP Technologies. The stock trades about -0.1 of its potential returns per unit of risk. The UFP Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 19,995 in UFP Technologies on March 8, 2024 and sell it today you would earn a total of 6,097 from holding UFP Technologies or generate 30.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.41% |
Values | Daily Returns |
CVS Health Corp vs. UFP Technologies
Performance |
Timeline |
CVS Health Corp |
UFP Technologies |
CVS Health and UFP Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVS Health and UFP Technologies
The main advantage of trading using opposite CVS Health and UFP Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, UFP Technologies 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 UFP Technologies will offset losses from the drop in UFP Technologies' long position.CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
UFP Technologies vs. Shockwave Medical | UFP Technologies vs. Abbott Laboratories | UFP Technologies vs. Pacific Biosciences of |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |