Correlation Between CVS Health and Beyond Meat

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

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

Diversification Opportunities for CVS Health and Beyond Meat

-0.21

Correlation Coefficient

CVS Health  Beyond Meat

Very good diversification

The 3 months correlation between CVS and Beyond is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 are associated (or correlated) with Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of CVS Health i.e., CVS Health and Beyond Meat go up and down completely randomly.

Pair Corralation between CVS Health and Beyond Meat

Assuming the 90 days trading horizon CVS Health is expected to under-perform the Beyond Meat. But the stock apears to be less risky and, when comparing its historical volatility, CVS Health is 2.54 times less risky than Beyond Meat. The stock trades about -0.05 of its potential returns per unit of risk. The Beyond Meat is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Beyond Meat on April 23, 2025 and sell it today you would earn a total of  42.00  from holding Beyond Meat or generate 55.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CVS Health  vs.  Beyond Meat

CVS Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVS Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Beyond Meat

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Meat are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beyond Meat sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVS Health and Beyond Meat

The main advantage of trading using opposite CVS Health and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat's long position.

The idea behind CVS Health and Beyond Meat 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 Global Correlations module to find global opportunities by holding instruments from different markets.