Correlation Between Cardinal Health and Air Products
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Air Products 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 Cardinal Health and Air Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Air Products Chemicals, you can compare the effects of market volatilities on Cardinal Health and Air Products 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 Cardinal Health with a short position of Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Air Products.
Diversification Opportunities for Cardinal Health and Air Products
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cardinal and Air is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals and Cardinal 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 Cardinal Health are associated (or correlated) with Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Cardinal Health i.e., Cardinal Health and Air Products go up and down completely randomly.
Pair Corralation between Cardinal Health and Air Products
Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.01 times less return on investment than Air Products. But when comparing it to its historical volatility, Cardinal Health is 3.56 times less risky than Air Products. It trades about 0.07 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 28,928 in Air Products Chemicals on October 9, 2024 and sell it today you would lose (683.00) from holding Air Products Chemicals or give up 2.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cardinal Health vs. Air Products Chemicals
Performance |
| Timeline |
| Cardinal Health |
| Air Products Chemicals |
Cardinal Health and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Air Products
The main advantage of trading using opposite Cardinal Health and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Cardinal Health vs. Walmart | Cardinal Health vs. BYD Co | Cardinal Health vs. Volkswagen AG | Cardinal Health vs. Volkswagen AG Non Vtg |
| Air Products vs. Zoom Video Communications | Air Products vs. Ecclesiastical Insurance Office | Air Products vs. Hilton Food Group | Air Products vs. Dairy Farm International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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