Correlation Between LION ONE and CVS Health

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

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

Diversification Opportunities for LION ONE and CVS Health

0.28

Correlation Coefficient

LION ONE  CVS Health

Modest diversification

The 3 months correlation between LION and CVS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and CVS Health go up and down completely randomly.

Pair Corralation between LION ONE and CVS Health

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the CVS Health. In addition to that, LION ONE is 1.4 times more volatile than CVS Health. It trades about -0.03 of its total potential returns per unit of risk. CVS Health is currently generating about 0.07 per unit of volatility. If you would invest  5,136  in CVS Health on September 5, 2024 and sell it today you would earn a total of  523.00  from holding CVS Health or generate 10.18% return on investment over 90 days.

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

LION ONE METALS  vs.  CVS Health

LION ONE METALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CVS Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CVS Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LION ONE and CVS Health

The main advantage of trading using opposite LION ONE and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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 LION ONE METALS 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.