Correlation Between BCE and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both BCE 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 BCE and CVS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCE Inc Pref and CVS HEALTH CDR, you can compare the effects of market volatilities on BCE 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 BCE with a short position of CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCE and CVS HEALTH.
Diversification Opportunities for BCE and CVS HEALTH
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BCE and CVS is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc Pref and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and BCE 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 BCE Inc Pref 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 CDR has no effect on the direction of BCE i.e., BCE and CVS HEALTH go up and down completely randomly.
Pair Corralation between BCE and CVS HEALTH
Assuming the 90 days trading horizon BCE is expected to generate 3.03 times less return on investment than CVS HEALTH. But when comparing it to its historical volatility, BCE Inc Pref is 1.84 times less risky than CVS HEALTH. It trades about 0.06 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,796 in CVS HEALTH CDR on August 31, 2025 and sell it today you would earn a total of 149.00 from holding CVS HEALTH CDR or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCE Inc Pref vs. CVS HEALTH CDR
Performance |
| Timeline |
| BCE Inc Pref |
| CVS HEALTH CDR |
BCE and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCE and CVS HEALTH
The main advantage of trading using opposite BCE and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCE 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.| BCE vs. Thunderbird Entertainment Group | BCE vs. DGL Investments No1 | BCE vs. TGS Esports | BCE vs. GreenLight Metals |
| CVS HEALTH vs. Russell Investments Global | CVS HEALTH vs. E L Financial Corp | CVS HEALTH vs. Hill Street Beverage | CVS HEALTH vs. E L Financial 3 |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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