Correlation Between Cardinal Health and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and F5 Networks 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 F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and F5 Networks, you can compare the effects of market volatilities on Cardinal Health and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and F5 Networks.
Diversification Opportunities for Cardinal Health and F5 Networks
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and 0IL6 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Cardinal Health i.e., Cardinal Health and F5 Networks go up and down completely randomly.
Pair Corralation between Cardinal Health and F5 Networks
Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.07 times more return on investment than F5 Networks. However, Cardinal Health is 1.07 times more volatile than F5 Networks. It trades about 0.31 of its potential returns per unit of risk. F5 Networks is currently generating about 0.31 per unit of risk. If you would invest 11,325 in Cardinal Health on September 5, 2024 and sell it today you would earn a total of 1,011 from holding Cardinal Health or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. F5 Networks
Performance |
| Timeline |
| Cardinal Health |
| F5 Networks |
Cardinal Health and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and F5 Networks
The main advantage of trading using opposite Cardinal Health and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Hyundai Motor | Cardinal Health vs. Toyota Motor Corp |
| F5 Networks vs. Silvercorp Metals | F5 Networks vs. McEwen Mining | F5 Networks vs. Liberty Media Corp | F5 Networks vs. Centaur Media |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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