Correlation Between Cardinal Health and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Cognizant Technology 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 Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Cognizant Technology Solutions, you can compare the effects of market volatilities on Cardinal Health and Cognizant Technology 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 Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Cognizant Technology.
Diversification Opportunities for Cardinal Health and Cognizant Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cardinal and Cognizant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology 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 Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Cardinal Health i.e., Cardinal Health and Cognizant Technology go up and down completely randomly.
Pair Corralation between Cardinal Health and Cognizant Technology
Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.06 times more return on investment than Cognizant Technology. However, Cardinal Health is 1.06 times more volatile than Cognizant Technology Solutions. It trades about 0.08 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.04 per unit of risk. If you would invest 7,469 in Cardinal Health on November 7, 2024 and sell it today you would earn a total of 5,230 from holding Cardinal Health or generate 70.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Cardinal Health vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Cardinal Health |
| Cognizant Technology |
Cardinal Health and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Cognizant Technology
The main advantage of trading using opposite Cardinal Health and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Cardinal Health vs. Jacquet Metal Service | Cardinal Health vs. Cornish Metals | Cardinal Health vs. Applied Materials | Cardinal Health vs. Tata Steel Limited |
| Cognizant Technology vs. First Class Metals | Cognizant Technology vs. McEwen Mining | Cognizant Technology vs. Wheaton Precious Metals | Cognizant Technology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |