Correlation Between TC Traders and CVS Health

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

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

Diversification Opportunities for TC Traders and CVS Health

-0.45

Correlation Coefficient

TC Traders  CVS Health

Very good diversification

The 3 months correlation between TRAD3 and CVS is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding TC Traders Club and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and TC Traders 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 TC Traders Club 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 TC Traders i.e., TC Traders and CVS Health go up and down completely randomly.

Pair Corralation between TC Traders and CVS Health

Assuming the 90 days trading horizon TC Traders Club is expected to generate 2.32 times more return on investment than CVS Health. However, TC Traders is 2.32 times more volatile than CVS Health. It trades about 0.06 of its potential returns per unit of risk. CVS Health is currently generating about -0.06 per unit of risk. If you would invest  660.00  in TC Traders Club on April 25, 2025 and sell it today you would earn a total of  85.00  from holding TC Traders Club or generate 12.88% return on investment over 90 days.

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

TC Traders Club  vs.  CVS Health

TC Traders Club

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TC Traders Club are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, TC Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with TC Traders and CVS Health

The main advantage of trading using opposite TC Traders and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC Traders 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 TC Traders Club 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.

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 the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.