Correlation Between CVS Health and Charter Communications

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

Diversification Opportunities for CVS Health and Charter Communications

0.24

Correlation Coefficient

CVS Health  Charter Communications

Modest diversification

The 3 months correlation between CVS and Charter is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of CVS Health i.e., CVS Health and Charter Communications go up and down completely randomly.

Pair Corralation between CVS Health and Charter Communications

Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.62 times more return on investment than Charter Communications. However, CVS Health Corp is 1.61 times less risky than Charter Communications. It trades about -0.04 of its potential returns per unit of risk. Charter Communications is currently generating about -0.19 per unit of risk. If you would invest  6,638  in CVS Health Corp on May 5, 2025 and sell it today you would lose (391.00) from holding CVS Health Corp or give up 5.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CVS Health Corp  vs.  Charter Communications

CVS Health Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CVS Health and Charter Communications

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

The idea behind CVS Health Corp and Charter Communications 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.