Correlation Between Cardinal Health and Archrock
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Archrock 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 Archrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Archrock, you can compare the effects of market volatilities on Cardinal Health and Archrock 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 Archrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Archrock.
Diversification Opportunities for Cardinal Health and Archrock
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and Archrock is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock 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 Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Cardinal Health i.e., Cardinal Health and Archrock go up and down completely randomly.
Pair Corralation between Cardinal Health and Archrock
Considering the 90-day investment horizon Cardinal Health is expected to generate 2.54 times less return on investment than Archrock. But when comparing it to its historical volatility, Cardinal Health is 1.58 times less risky than Archrock. It trades about 0.08 of its potential returns per unit of risk. Archrock is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 778.00 in Archrock on August 27, 2024 and sell it today you would earn a total of 1,808 from holding Archrock or generate 232.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Archrock
Performance |
| Timeline |
| Cardinal Health |
| Archrock |
Cardinal Health and Archrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Archrock
The main advantage of trading using opposite Cardinal Health and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Archrock 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 Archrock will offset losses from the drop in Archrock's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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