Correlation Between Apple and CARDINAL HEALTH
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and CARDINAL HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CARDINAL HEALTH, you can compare the effects of market volatilities on Apple 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 Apple with a short position of CARDINAL HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CARDINAL HEALTH.
Diversification Opportunities for Apple and CARDINAL HEALTH
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and CARDINAL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and Apple 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 Apple Inc 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 Apple i.e., Apple and CARDINAL HEALTH go up and down completely randomly.
Pair Corralation between Apple and CARDINAL HEALTH
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the CARDINAL HEALTH. In addition to that, Apple is 2.46 times more volatile than CARDINAL HEALTH. It trades about -0.45 of its total potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.7 per unit of volatility. If you would invest 11,359 in CARDINAL HEALTH on October 25, 2024 and sell it today you would earn a total of 971.00 from holding CARDINAL HEALTH or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. CARDINAL HEALTH
Performance |
| Timeline |
| Apple Inc |
| CARDINAL HEALTH |
Apple and CARDINAL HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CARDINAL HEALTH
The main advantage of trading using opposite Apple and CARDINAL HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. PEPTONIC MEDICAL | Apple vs. SMA Solar Technology | Apple vs. AECOM TECHNOLOGY | Apple vs. Medical Properties Trust |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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