Correlation Between Cardinal Health and PureTech Health
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and PureTech Health 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 PureTech Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and PureTech Health plc, you can compare the effects of market volatilities on Cardinal Health and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and PureTech Health.
Diversification Opportunities for Cardinal Health and PureTech Health
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cardinal and PureTech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Cardinal Health i.e., Cardinal Health and PureTech Health go up and down completely randomly.
Pair Corralation between Cardinal Health and PureTech Health
Assuming the 90 days trading horizon Cardinal Health is expected to generate 0.91 times more return on investment than PureTech Health. However, Cardinal Health is 1.1 times less risky than PureTech Health. It trades about -0.05 of its potential returns per unit of risk. PureTech Health plc is currently generating about -0.09 per unit of risk. If you would invest 12,972 in Cardinal Health on November 28, 2024 and sell it today you would lose (178.00) from holding Cardinal Health or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. PureTech Health plc
Performance |
| Timeline |
| Cardinal Health |
| PureTech Health plc |
Cardinal Health and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and PureTech Health
The main advantage of trading using opposite Cardinal Health and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| Cardinal Health vs. UNIQA Insurance Group | Cardinal Health vs. Tetragon Financial Group | Cardinal Health vs. Playtech Plc | Cardinal Health vs. Indutrade AB |
| PureTech Health vs. Zinc Media Group | PureTech Health vs. Tetragon Financial Group | PureTech Health vs. Cembra Money Bank | PureTech Health vs. Catalyst Media Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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