Correlation Between CVS Health and SurModics

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

Diversification Opportunities for CVS Health and SurModics

-0.32

Correlation Coefficient

CVS Health  SurModics

Very good diversification

The 3 months correlation between CVS and SurModics is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and SurModics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SurModics 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 SurModics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SurModics has no effect on the direction of CVS Health i.e., CVS Health and SurModics go up and down completely randomly.

Pair Corralation between CVS Health and SurModics

Considering the 90-day investment horizon CVS Health Corp is expected to generate 3.01 times more return on investment than SurModics. However, CVS Health is 3.01 times more volatile than SurModics. It trades about 0.0 of its potential returns per unit of risk. SurModics is currently generating about -0.19 per unit of risk. If you would invest  5,683  in CVS Health Corp on July 28, 2024 and sell it today you would lose (34.00) from holding CVS Health Corp or give up 0.6% of portfolio value over 90 days.

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

CVS Health Corp  vs.  SurModics

CVS Health Corp

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SurModics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SurModics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CVS Health and SurModics

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

The idea behind CVS Health Corp and SurModics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.