Correlation Between Air Transport and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Air Transport 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 Air Transport and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Transport Services and Cardinal Health, you can compare the effects of market volatilities on Air Transport 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 Air Transport with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Transport and Cardinal Health.
Diversification Opportunities for Air Transport and Cardinal Health
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Cardinal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and Cardinal Health go up and down completely randomly.
Pair Corralation between Air Transport and Cardinal Health
Given the investment horizon of 90 days Air Transport is expected to generate 8.52 times less return on investment than Cardinal Health. But when comparing it to its historical volatility, Air Transport Services is 8.79 times less risky than Cardinal Health. It trades about 0.46 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 11,650 in Cardinal Health on October 20, 2024 and sell it today you would earn a total of 977.00 from holding Cardinal Health or generate 8.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Transport Services vs. Cardinal Health
Performance |
| Timeline |
| Air Transport Services |
| Cardinal Health |
Air Transport and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Transport and Cardinal Health
The main advantage of trading using opposite Air Transport and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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.| Air Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
| Cardinal Health vs. Cigna Corp | Cardinal Health vs. Definitive Healthcare Corp | Cardinal Health vs. Edwards Lifesciences Corp | Cardinal Health vs. Guardant Health |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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