Correlation Between Avient Corp and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Avient Corp 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 Avient Corp and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avient Corp and Cardinal Health, you can compare the effects of market volatilities on Avient Corp 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 Avient Corp with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Cardinal Health.
Diversification Opportunities for Avient Corp and Cardinal Health
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Avient and Cardinal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Avient Corp 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 Avient Corp 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 Avient Corp i.e., Avient Corp and Cardinal Health go up and down completely randomly.
Pair Corralation between Avient Corp and Cardinal Health
Given the investment horizon of 90 days Avient Corp is expected to generate 1.25 times more return on investment than Cardinal Health. However, Avient Corp is 1.25 times more volatile than Cardinal Health. It trades about 0.26 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.29 per unit of risk. If you would invest 4,667 in Avient Corp on September 4, 2024 and sell it today you would earn a total of 490.00 from holding Avient Corp or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avient Corp vs. Cardinal Health
Performance |
| Timeline |
| Avient Corp |
| Cardinal Health |
Avient Corp and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avient Corp and Cardinal Health
The main advantage of trading using opposite Avient Corp and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp 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.| Avient Corp vs. Axalta Coating Systems | Avient Corp vs. H B Fuller | Avient Corp vs. Quaker Chemical | Avient Corp vs. Cabot |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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