Correlation Between Avadel Pharmaceuticals and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Avadel Pharmaceuticals 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 Avadel Pharmaceuticals and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avadel Pharmaceuticals PLC and Cardinal Health, you can compare the effects of market volatilities on Avadel Pharmaceuticals 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 Avadel Pharmaceuticals with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avadel Pharmaceuticals and Cardinal Health.
Diversification Opportunities for Avadel Pharmaceuticals and Cardinal Health
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avadel and Cardinal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals PLC and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC 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 Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and Cardinal Health go up and down completely randomly.
Pair Corralation between Avadel Pharmaceuticals and Cardinal Health
Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to under-perform the Cardinal Health. In addition to that, Avadel Pharmaceuticals is 2.35 times more volatile than Cardinal Health. It trades about -0.06 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.06 per unit of volatility. If you would invest 10,841 in Cardinal Health on September 3, 2024 and sell it today you would earn a total of 1,383 from holding Cardinal Health or generate 12.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avadel Pharmaceuticals PLC vs. Cardinal Health
Performance |
| Timeline |
| Avadel Pharmaceuticals |
| Cardinal Health |
Avadel Pharmaceuticals and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avadel Pharmaceuticals and Cardinal Health
The main advantage of trading using opposite Avadel Pharmaceuticals and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avadel Pharmaceuticals 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.| Avadel Pharmaceuticals vs. Neurocrine Biosciences | Avadel Pharmaceuticals vs. Ironwood Pharmaceuticals | Avadel Pharmaceuticals vs. Alkermes Plc | Avadel Pharmaceuticals vs. Intracellular Th |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |