Correlation Between Erste Group and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Erste Group and Cardinal 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 Erste Group and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Cardinal Health, you can compare the effects of market volatilities on Erste Group and Cardinal 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 Erste Group with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Cardinal Health.
Diversification Opportunities for Erste Group and Cardinal Health
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erste and Cardinal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Erste Group 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 Erste Group Bank are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Erste Group i.e., Erste Group and Cardinal Health go up and down completely randomly.
Pair Corralation between Erste Group and Cardinal Health
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.52 times more return on investment than Cardinal Health. However, Erste Group is 1.52 times more volatile than Cardinal Health. It trades about 0.29 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.26 per unit of risk. If you would invest 5,580 in Erste Group Bank on October 12, 2024 and sell it today you would earn a total of 387.00 from holding Erste Group Bank or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Erste Group Bank vs. Cardinal Health
Performance |
| Timeline |
| Erste Group Bank |
| Cardinal Health |
Erste Group and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Cardinal Health
The main advantage of trading using opposite Erste Group and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group position performs unexpectedly, Cardinal 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Erste Group vs. G5 Entertainment AB | Erste Group vs. Grand Vision Media | Erste Group vs. JD Sports Fashion | Erste Group vs. Baker Steel Resources |
| Cardinal Health vs. Erste Group Bank | Cardinal Health vs. Gamma Communications PLC | Cardinal Health vs. Spirent Communications plc | Cardinal Health vs. St Galler Kantonalbank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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