Correlation Between Anthem and CVS Health
Can any of the company-specific risk be diversified away by investing in both Anthem 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 Anthem and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anthem Inc and CVS Health Corp, you can compare the effects of market volatilities on Anthem 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 Anthem with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anthem and CVS Health.
Diversification Opportunities for Anthem and CVS Health
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anthem and CVS is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Anthem Inc 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 Anthem 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 Anthem Inc 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 Anthem i.e., Anthem and CVS Health go up and down completely randomly.
Pair Corralation between Anthem and CVS Health
If you would invest 48,258 in Anthem Inc on January 25, 2024 and sell it today you would earn a total of 0.00 from holding Anthem Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Anthem Inc vs. CVS Health Corp
Performance |
| Timeline |
| Anthem Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CVS Health Corp |
Anthem and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anthem and CVS Health
The main advantage of trading using opposite Anthem and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anthem 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 Anthem Inc 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.| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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