Correlation Between Central Proteina and CVS Health
Can any of the company-specific risk be diversified away by investing in both Central Proteina 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 Central Proteina and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Proteina Prima and CVS Health Corp, you can compare the effects of market volatilities on Central Proteina 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 Central Proteina with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Proteina and CVS Health.
Diversification Opportunities for Central Proteina and CVS Health
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Central and CVS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Central Proteina Prima 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 Central Proteina 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 Central Proteina Prima 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 Central Proteina i.e., Central Proteina and CVS Health go up and down completely randomly.
Pair Corralation between Central Proteina and CVS Health
Assuming the 90 days trading horizon Central Proteina Prima is expected to under-perform the CVS Health. In addition to that, Central Proteina is 1.7 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 -0.03 per unit of volatility. If you would invest 9,155 in CVS Health Corp on January 20, 2024 and sell it today you would lose (2,180) from holding CVS Health Corp or give up 23.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.76% |
| Values | Daily Returns |
Central Proteina Prima vs. CVS Health Corp
Performance |
| Timeline |
| Central Proteina Prima |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| CVS Health Corp |
Central Proteina and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Proteina and CVS Health
The main advantage of trading using opposite Central Proteina and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Proteina 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 Central Proteina Prima 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. 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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