Correlation Between Magellan Health and CVS Corp

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Can any of the company-specific risk be diversified away by investing in both Magellan Health and CVS Corp 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 Magellan Health and CVS Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magellan Health and CVS Corp, you can compare the effects of market volatilities on Magellan Health and CVS Corp 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 Magellan Health with a short position of CVS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magellan Health and CVS Corp.

Diversification Opportunities for Magellan Health and CVS Corp

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Magellan and CVS Corp is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Magellan Health Inc and CVS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Corp and Magellan 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 Magellan Health are associated (or correlated) with CVS Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Corp has no effect on the direction of Magellan Health i.e., Magellan Health and CVS Corp go up and down completely randomly.

Pair Corralation between Magellan Health and CVS Corp

If you would invest  7,939  in CVS Corp on April 1, 2022 and sell it today you would earn a total of  1,370  from holding CVS Corp or generate 17.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Magellan Health Inc  vs.  CVS Corp

 Performance (%) 
      Timeline 
Magellan Health 
Magellan Performance
0 of 100
Over the last 90 days Magellan Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Magellan Health is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
CVS Corp 
CVS Corp Performance
0 of 100
Over the last 90 days CVS Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0242
Payout Ratio
0.24
Last Split Factor
2:1
Forward Annual Dividend Rate
2.2
Dividend Date
2022-05-02
Ex Dividend Date
2022-04-21
Last Split Date
2005-06-07

CVS Corp Price Channel

Magellan Health and CVS Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Magellan Health and CVS Corp

The main advantage of trading using opposite Magellan Health and CVS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magellan Health position performs unexpectedly, CVS Corp 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 Corp will offset losses from the drop in CVS Corp's long position.
The idea behind Magellan Health and CVS 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.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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