Correlation Between AmerisourceBergen and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both AmerisourceBergen 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 AmerisourceBergen and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmerisourceBergen and Cardinal Health, you can compare the effects of market volatilities on AmerisourceBergen 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 AmerisourceBergen with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmerisourceBergen and Cardinal Health.
Diversification Opportunities for AmerisourceBergen and Cardinal Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AmerisourceBergen and Cardinal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AmerisourceBergen and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and AmerisourceBergen 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 AmerisourceBergen 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 AmerisourceBergen i.e., AmerisourceBergen and Cardinal Health go up and down completely randomly.
Pair Corralation between AmerisourceBergen and Cardinal Health
Assuming the 90 days horizon AmerisourceBergen is expected to generate 1.85 times less return on investment than Cardinal Health. But when comparing it to its historical volatility, AmerisourceBergen is 1.82 times less risky than Cardinal Health. It trades about 0.24 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 10,250 in Cardinal Health on August 28, 2024 and sell it today you would earn a total of 1,495 from holding Cardinal Health or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmerisourceBergen vs. Cardinal Health
Performance |
| Timeline |
| AmerisourceBergen |
| Cardinal Health |
AmerisourceBergen and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmerisourceBergen and Cardinal Health
The main advantage of trading using opposite AmerisourceBergen and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmerisourceBergen 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.| AmerisourceBergen vs. MI Homes | AmerisourceBergen vs. Check Point Software | AmerisourceBergen vs. PKSHA TECHNOLOGY INC | AmerisourceBergen vs. SMA Solar Technology |
| Cardinal Health vs. Westinghouse Air Brake | Cardinal Health vs. CompuGroup Medical SE | Cardinal Health vs. Chongqing Machinery Electric | Cardinal Health vs. DELTA AIR LINES |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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