Correlation Between Odyssean Investment and CVS Health

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

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

Diversification Opportunities for Odyssean Investment and CVS Health

0.39

Correlation Coefficient

Odyssean Investment  CVS Health

Weak diversification

The 3 months correlation between Odyssean and CVS is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Odyssean Investment Trust 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 Odyssean Investment 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 Odyssean Investment Trust 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 Odyssean Investment i.e., Odyssean Investment and CVS Health go up and down completely randomly.

Pair Corralation between Odyssean Investment and CVS Health

Assuming the 90 days trading horizon Odyssean Investment Trust is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, Odyssean Investment Trust is 1.96 times less risky than CVS Health. The stock trades about -0.14 of its potential returns per unit of risk. The CVS Health Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  5,768  in CVS Health Corp on September 14, 2024 and sell it today you would lose (723.00) from holding CVS Health Corp or give up 12.53% of portfolio value over 90 days.

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

Odyssean Investment Trust  vs.  CVS Health Corp

Odyssean Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssean Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CVS Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Odyssean Investment and CVS Health

The main advantage of trading using opposite Odyssean Investment and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odyssean Investment 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 Odyssean Investment Trust 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.