Correlation Between Alstria Office and CVS Health

Can any of the company-specific risk be diversified away by investing in both Alstria Office 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 Alstria Office and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and CVS Health, you can compare the effects of market volatilities on Alstria Office 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 Alstria Office with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and CVS Health.

Diversification Opportunities for Alstria Office and CVS Health

-0.6

Correlation Coefficient

Alstria Office  CVS Health

Excellent diversification

The 3 months correlation between Alstria and CVS is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Alstria Office 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 alstria office REIT AG 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 has no effect on the direction of Alstria Office i.e., Alstria Office and CVS Health go up and down completely randomly.

Pair Corralation between Alstria Office and CVS Health

Assuming the 90 days horizon alstria office REIT AG is expected to generate 1.6 times more return on investment than CVS Health. However, Alstria Office is 1.6 times more volatile than CVS Health. It trades about 0.17 of its potential returns per unit of risk. CVS Health is currently generating about -0.07 per unit of risk. If you would invest  336.00  in alstria office REIT AG on September 23, 2024 and sell it today you would earn a total of  424.00  from holding alstria office REIT AG or generate 126.19% return on investment over 90 days.

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

alstria office REIT AG  vs.  CVS Health

alstria office REIT

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alstria Office reported solid returns over the last few months and may actually be approaching a breakup point.

CVS Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alstria Office and CVS Health

The main advantage of trading using opposite Alstria Office and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office 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.

The idea behind alstria office REIT AG and CVS Health 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.