Correlation Between CVS Health and Alphatec Holdings

Can any of the company-specific risk be diversified away by investing in both CVS Health and Alphatec Holdings 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 Alphatec Holdings 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 Alphatec Holdings, you can compare the effects of market volatilities on CVS Health and Alphatec Holdings 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 Alphatec Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and Alphatec Holdings.

Diversification Opportunities for CVS Health and Alphatec Holdings

-0.18

Correlation Coefficient

CVS Health  Alphatec Holdings

Good diversification

The 3 months correlation between CVS and Alphatec is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings 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 Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of CVS Health i.e., CVS Health and Alphatec Holdings go up and down completely randomly.

Pair Corralation between CVS Health and Alphatec Holdings

Considering the 90-day investment horizon CVS Health is expected to generate 2.7 times less return on investment than Alphatec Holdings. But when comparing it to its historical volatility, CVS Health Corp is 2.66 times less risky than Alphatec Holdings. It trades about 0.08 of its potential returns per unit of risk. Alphatec Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,274  in Alphatec Holdings on May 14, 2025 and sell it today you would earn a total of  258.00  from holding Alphatec Holdings or generate 20.25% return on investment over 90 days.

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

CVS Health Corp  vs.  Alphatec Holdings

CVS Health Corp

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CVS Health may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Alphatec Holdings

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVS Health and Alphatec Holdings

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

The idea behind CVS Health Corp and Alphatec Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.