Correlation Between Cardinal Health and Cars
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Cars Inc, you can compare the effects of market volatilities on Cardinal Health and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Cars.
Diversification Opportunities for Cardinal Health and Cars
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cardinal and Cars is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Cardinal Health i.e., Cardinal Health and Cars go up and down completely randomly.
Pair Corralation between Cardinal Health and Cars
Assuming the 90 days trading horizon Cardinal Health is expected to generate 0.48 times more return on investment than Cars. However, Cardinal Health is 2.1 times less risky than Cars. It trades about -0.1 of its potential returns per unit of risk. Cars Inc is currently generating about -0.36 per unit of risk. If you would invest 12,148 in Cardinal Health on September 24, 2024 and sell it today you would lose (319.00) from holding Cardinal Health or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Cardinal Health vs. Cars Inc
Performance |
| Timeline |
| Cardinal Health |
| Cars Inc |
Cardinal Health and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Cars
The main advantage of trading using opposite Cardinal Health and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Cardinal Health vs. GoldMining | Cardinal Health vs. Metals Exploration Plc | Cardinal Health vs. DFS Furniture PLC | Cardinal Health vs. Cornish Metals |
| Cars vs. Intuitive Investments Group | Cars vs. Cardinal Health | Cars vs. Monks Investment Trust | Cars vs. The Mercantile 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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