Correlation Between Cardinal Health, and Gen Digital
Can any of the company-specific risk be diversified away by investing in both Cardinal Health, and Gen Digital 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 Gen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health, and Gen Digital, you can compare the effects of market volatilities on Cardinal Health, and Gen Digital 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 Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health, and Gen Digital.
Diversification Opportunities for Cardinal Health, and Gen Digital
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cardinal and Gen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health, and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Cardinal Health, i.e., Cardinal Health, and Gen Digital go up and down completely randomly.
Pair Corralation between Cardinal Health, and Gen Digital
Assuming the 90 days trading horizon Cardinal Health, is expected to generate 2.39 times more return on investment than Gen Digital. However, Cardinal Health, is 2.39 times more volatile than Gen Digital. It trades about 0.19 of its potential returns per unit of risk. Gen Digital is currently generating about -0.14 per unit of risk. If you would invest 63,682 in Cardinal Health, on October 30, 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health, vs. Gen Digital
Performance |
| Timeline |
| Cardinal Health, |
| Gen Digital |
Cardinal Health, and Gen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health, and Gen Digital
The main advantage of trading using opposite Cardinal Health, and Gen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health, position performs unexpectedly, Gen Digital 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 Gen Digital will offset losses from the drop in Gen Digital's long position.| Cardinal Health, vs. Globus Medical, | Cardinal Health, vs. Chunghwa Telecom Co, | Cardinal Health, vs. British American Tobacco | Cardinal Health, vs. JB Hunt Transport |
| Gen Digital vs. Mliuz SA | Gen Digital vs. TOTVS SA | Gen Digital vs. Pet Center Comrcio | Gen Digital vs. Natura Co Holding |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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