Correlation Between Enovis Corp and CVS Health

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

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

Diversification Opportunities for Enovis Corp and CVS Health

-0.48

Correlation Coefficient

Enovis Corp  CVS Health

Very good diversification

The 3 months correlation between Enovis and CVS is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Enovis Corp 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 Enovis Corp 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 Enovis Corp 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 Enovis Corp i.e., Enovis Corp and CVS Health go up and down completely randomly.

Pair Corralation between Enovis Corp and CVS Health

Given the investment horizon of 90 days Enovis Corp is expected to generate 0.82 times more return on investment than CVS Health. However, Enovis Corp is 1.22 times less risky than CVS Health. It trades about 0.08 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.05 per unit of risk. If you would invest  4,457  in Enovis Corp on September 1, 2024 and sell it today you would earn a total of  424.00  from holding Enovis Corp or generate 9.51% return on investment over 90 days.

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

Enovis Corp  vs.  CVS Health Corp

Enovis Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enovis Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Enovis Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

Pair Trading with Enovis Corp and CVS Health

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