Correlation Between CVS Health and Tivic Health

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

Diversification Opportunities for CVS Health and Tivic Health

-0.59

Correlation Coefficient

CVS Health  Tivic Health

Excellent diversification

The 3 months correlation between CVS and Tivic is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Tivic Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tivic Health Systems 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 Tivic Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tivic Health Systems has no effect on the direction of CVS Health i.e., CVS Health and Tivic Health go up and down completely randomly.

Pair Corralation between CVS Health and Tivic Health

Considering the 90-day investment horizon CVS Health Corp is expected to generate 0.27 times more return on investment than Tivic Health. However, CVS Health Corp is 3.64 times less risky than Tivic Health. It trades about 0.05 of its potential returns per unit of risk. Tivic Health Systems is currently generating about -0.01 per unit of risk. If you would invest  5,661  in CVS Health Corp on August 30, 2024 and sell it today you would earn a total of  335.00  from holding CVS Health Corp or generate 5.92% return on investment over 90 days.

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

CVS Health Corp  vs.  Tivic Health Systems

CVS Health Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CVS Health may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Tivic Health Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tivic Health Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Tivic Health is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CVS Health and Tivic Health

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

The idea behind CVS Health Corp and Tivic Health Systems 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.