Correlation Between Cardinal Health, and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Cardinal Health, and Procter Gamble 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 Cardinal Health, and Procter Gamble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health, and The Procter Gamble, you can compare the effects of market volatilities on Cardinal Health, and Procter Gamble 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 Cardinal Health, with a short position of Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health, and Procter Gamble.
Diversification Opportunities for Cardinal Health, and Procter Gamble
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Procter is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health, and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Cardinal Health, 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 Cardinal Health, are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Cardinal Health, i.e., Cardinal Health, and Procter Gamble go up and down completely randomly.
Pair Corralation between Cardinal Health, and Procter Gamble
Assuming the 90 days trading horizon Cardinal Health, is expected to generate 1.93 times more return on investment than Procter Gamble. However, Cardinal Health, is 1.93 times more volatile than The Procter Gamble. It trades about 0.26 of its potential returns per unit of risk. The Procter Gamble is currently generating about -0.24 per unit of risk. If you would invest 63,682 in Cardinal Health, on October 28, 2024 and sell it today you would earn a total of 9,180 from holding Cardinal Health, or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health, vs. The Procter Gamble
Performance |
| Timeline |
| Cardinal Health, |
| Procter Gamble |
Cardinal Health, and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health, and Procter Gamble
The main advantage of trading using opposite Cardinal Health, and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health, position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Cardinal Health, vs. Omega Healthcare Investors, | Cardinal Health, vs. American Airlines Group | Cardinal Health, vs. Tyson Foods | Cardinal Health, vs. Arrow Electronics, |
| Procter Gamble vs. Zebra Technologies | Procter Gamble vs. Jefferies Financial Group | Procter Gamble vs. Ares Management | Procter Gamble vs. Bread Financial Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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