Correlation Between CVS Health and Anavex Life

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

Diversification Opportunities for CVS Health and Anavex Life

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between CVS Health and Anavex is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Anavex Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anavex Life Sciences 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 Anavex Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anavex Life Sciences has no effect on the direction of CVS Health i.e., CVS Health and Anavex Life go up and down completely randomly.

Pair Corralation between CVS Health and Anavex Life

Considering the 90-day investment horizon CVS Health is expected to generate 8.08 times less return on investment than Anavex Life. But when comparing it to its historical volatility, CVS Health Corp is 3.82 times less risky than Anavex Life. It trades about 0.05 of its potential returns per unit of risk. Anavex Life Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  897.00  in Anavex Life Sciences on September 4, 2022 and sell it today you would earn a total of  308.00  from holding Anavex Life Sciences or generate 34.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CVS Health Corp  vs.  Anavex Life Sciences

 Performance (%) 
       Timeline  
CVS Health Corp 
CVS Health Performance
3 of 100
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. Even with relatively invariable basic indicators, CVS Health is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CVS Health Price Channel

Anavex Life Sciences 
Anavex Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Anavex Life Sciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Anavex Life revealed solid returns over the last few months and may actually be approaching a breakup point.

Anavex Price Channel

CVS Health and Anavex Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CVS Health and Anavex Life

The main advantage of trading using opposite CVS Health and Anavex Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Anavex Life 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 Anavex Life will offset losses from the drop in Anavex Life's long position.
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The idea behind CVS Health Corp and Anavex Life Sciences 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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Check out your portfolio center. 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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