Correlation Between Preferred Bank and CARDINAL HEALTH
Can any of the company-specific risk be diversified away by investing in both Preferred Bank 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 Preferred Bank and CARDINAL HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Bank and CARDINAL HEALTH, you can compare the effects of market volatilities on Preferred Bank 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 Preferred Bank with a short position of CARDINAL HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Bank and CARDINAL HEALTH.
Diversification Opportunities for Preferred Bank and CARDINAL HEALTH
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Preferred and CARDINAL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Bank and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and Preferred Bank 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 Preferred 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 Preferred Bank i.e., Preferred Bank and CARDINAL HEALTH go up and down completely randomly.
Pair Corralation between Preferred Bank and CARDINAL HEALTH
Assuming the 90 days horizon Preferred Bank is expected to generate 2.06 times more return on investment than CARDINAL HEALTH. However, Preferred Bank is 2.06 times more volatile than CARDINAL HEALTH. It trades about 0.2 of its potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.39 per unit of risk. If you would invest 8,125 in Preferred Bank on November 6, 2024 and sell it today you would earn a total of 575.00 from holding Preferred Bank or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Bank vs. CARDINAL HEALTH
Performance |
| Timeline |
| Preferred Bank |
| CARDINAL HEALTH |
Preferred Bank and CARDINAL HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Bank and CARDINAL HEALTH
The main advantage of trading using opposite Preferred Bank and CARDINAL HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Bank 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.| Preferred Bank vs. Electronic Arts | Preferred Bank vs. AOI Electronics Co | Preferred Bank vs. Northern Data AG | Preferred Bank vs. UMC Electronics Co |
| CARDINAL HEALTH vs. CHINA TONTINE WINES | CARDINAL HEALTH vs. MICRONIC MYDATA | CARDINAL HEALTH vs. TERADATA | CARDINAL HEALTH vs. Pure Storage |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |