Correlation Between Citigroup and CVS Health
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and CVS Health Corp, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and CVS Health.
Diversification Opportunities for Citigroup and CVS Health
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Citigroup and CVS is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Citigroup 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 Citigroup 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 Corp has no effect on the direction of Citigroup i.e., Citigroup and CVS Health go up and down completely randomly.
Pair Corralation between Citigroup and CVS Health
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.33 times less return on investment than CVS Health. In addition to that, Citigroup is 1.17 times more volatile than CVS Health Corp. It trades about 0.33 of its total potential returns per unit of risk. CVS Health Corp is currently generating about 0.51 per unit of volatility. If you would invest 6,134 in CVS Health Corp on March 26, 2025 and sell it today you would earn a total of 624.00 from holding CVS Health Corp or generate 10.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. CVS Health Corp
Performance |
| Timeline |
| Citigroup |
| CVS Health Corp |
Citigroup and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and CVS Health
The main advantage of trading using opposite Citigroup and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.| Citigroup vs. JPMorgan Chase Co | Citigroup vs. Wells Fargo | Citigroup vs. Toronto Dominion Bank | Citigroup vs. Nu Holdings |
| CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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