Correlation Between MegaLong Canadian and CVS HEALTH
Can any of the company-specific risk be diversified away by investing in both MegaLong Canadian 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 MegaLong Canadian and CVS HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MegaLong Canadian Banks and CVS HEALTH CDR, you can compare the effects of market volatilities on MegaLong Canadian 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 MegaLong Canadian with a short position of CVS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaLong Canadian and CVS HEALTH.
Diversification Opportunities for MegaLong Canadian and CVS HEALTH
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MegaLong and CVS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding MegaLong Canadian Banks 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 MegaLong Canadian 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 MegaLong Canadian Banks 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 MegaLong Canadian i.e., MegaLong Canadian and CVS HEALTH go up and down completely randomly.
Pair Corralation between MegaLong Canadian and CVS HEALTH
Assuming the 90 days trading horizon MegaLong Canadian Banks is expected to generate 1.26 times more return on investment than CVS HEALTH. However, MegaLong Canadian is 1.26 times more volatile than CVS HEALTH CDR. It trades about 0.27 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about 0.1 per unit of risk. If you would invest 2,679 in MegaLong Canadian Banks on August 26, 2025 and sell it today you would earn a total of 946.00 from holding MegaLong Canadian Banks or generate 35.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MegaLong Canadian Banks vs. CVS HEALTH CDR
Performance |
| Timeline |
| MegaLong Canadian Banks |
| CVS HEALTH CDR |
MegaLong Canadian and CVS HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MegaLong Canadian and CVS HEALTH
The main advantage of trading using opposite MegaLong Canadian and CVS HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MegaLong Canadian 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.| MegaLong Canadian vs. MegaLong Semiconductors Daily | MegaLong Canadian vs. MegaLong 20 Year | MegaLong Canadian vs. MegaLong Canadian Gold | MegaLong Canadian vs. MegaLong SP 500 |
| CVS HEALTH vs. Information Services | CVS HEALTH vs. Labrador Iron Ore | CVS HEALTH vs. Big Rock Brewery | CVS HEALTH vs. Belo Sun Mining |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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