Correlation Between Canadian Imperial and CVS Health
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial 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 Canadian Imperial and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Imperial Bank and CVS Health Corp, you can compare the effects of market volatilities on Canadian Imperial 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 Canadian Imperial with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and CVS Health.
Diversification Opportunities for Canadian Imperial and CVS Health
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canadian and CVS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank 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 Canadian Imperial 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 Canadian Imperial Bank 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 Canadian Imperial i.e., Canadian Imperial and CVS Health go up and down completely randomly.
Pair Corralation between Canadian Imperial and CVS Health
Allowing for the 90-day total investment horizon Canadian Imperial Bank is expected to generate 0.68 times more return on investment than CVS Health. However, Canadian Imperial Bank is 1.47 times less risky than CVS Health. It trades about 0.09 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.06 per unit of risk. If you would invest 4,490 in Canadian Imperial Bank on January 20, 2024 and sell it today you would earn a total of 232.00 from holding Canadian Imperial Bank or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. CVS Health Corp
Performance |
| Timeline |
| Canadian Imperial Bank |
| CVS Health Corp |
Canadian Imperial and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and CVS Health
The main advantage of trading using opposite Canadian Imperial and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial 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.| Canadian Imperial vs. Bank of Montreal | Canadian Imperial vs. Toronto Dominion Bank | Canadian Imperial vs. Royal Bank of | Canadian Imperial vs. Citigroup |
| CVS Health vs. Certara | CVS Health vs. HealthStream | CVS Health vs. Evolent Health | CVS Health vs. Streamline Health Solutions |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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