Correlation Between Cardinal Health and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Premier Foods 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 Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Premier Foods PLC, you can compare the effects of market volatilities on Cardinal Health and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Premier Foods.
Diversification Opportunities for Cardinal Health and Premier Foods
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and Premier is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Cardinal Health i.e., Cardinal Health and Premier Foods go up and down completely randomly.
Pair Corralation between Cardinal Health and Premier Foods
Assuming the 90 days trading horizon Cardinal Health is expected to under-perform the Premier Foods. In addition to that, Cardinal Health is 1.18 times more volatile than Premier Foods PLC. It trades about -0.08 of its total potential returns per unit of risk. Premier Foods PLC is currently generating about 0.19 per unit of volatility. If you would invest 18,260 in Premier Foods PLC on September 21, 2024 and sell it today you would earn a total of 800.00 from holding Premier Foods PLC or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Premier Foods PLC
Performance |
| Timeline |
| Cardinal Health |
| Premier Foods PLC |
Cardinal Health and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Premier Foods
The main advantage of trading using opposite Cardinal Health and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Hyundai Motor | Cardinal Health vs. Reliance Industries Ltd |
| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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