Correlation Between CVS HEALTH and Sprott Physical

Can any of the company-specific risk be diversified away by investing in both CVS HEALTH and Sprott Physical 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 Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVS HEALTH CDR and Sprott Physical Gold, you can compare the effects of market volatilities on CVS HEALTH and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS HEALTH and Sprott Physical.

Diversification Opportunities for CVS HEALTH and Sprott Physical

-0.11

Correlation Coefficient

CVS HEALTH  Sprott Physical

Good diversification

The 3 months correlation between CVS and Sprott is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CVS HEALTH CDR and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 CDR are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of CVS HEALTH i.e., CVS HEALTH and Sprott Physical go up and down completely randomly.

Pair Corralation between CVS HEALTH and Sprott Physical

Assuming the 90 days trading horizon CVS HEALTH CDR is expected to under-perform the Sprott Physical. In addition to that, CVS HEALTH is 1.8 times more volatile than Sprott Physical Gold. It trades about -0.04 of its total potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.08 per unit of volatility. If you would invest  4,029  in Sprott Physical Gold on May 5, 2025 and sell it today you would earn a total of  203.00  from holding Sprott Physical Gold or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CVS HEALTH CDR  vs.  Sprott Physical Gold

CVS HEALTH CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVS HEALTH CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CVS HEALTH is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Sprott Physical Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Sprott Physical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CVS HEALTH and Sprott Physical

The main advantage of trading using opposite CVS HEALTH and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS HEALTH position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical's long position.

The idea behind CVS HEALTH CDR and Sprott Physical Gold 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.