Correlation Between Cardinal Health and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Atmos Energy 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 Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Atmos Energy, you can compare the effects of market volatilities on Cardinal Health and Atmos Energy 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 Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Atmos Energy.
Diversification Opportunities for Cardinal Health and Atmos Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and Atmos is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy 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 Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Cardinal Health i.e., Cardinal Health and Atmos Energy go up and down completely randomly.
Pair Corralation between Cardinal Health and Atmos Energy
Considering the 90-day investment horizon Cardinal Health is expected to generate 2.29 times more return on investment than Atmos Energy. However, Cardinal Health is 2.29 times more volatile than Atmos Energy. It trades about 0.2 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.23 per unit of risk. If you would invest 11,192 in Cardinal Health on August 24, 2024 and sell it today you would earn a total of 1,150 from holding Cardinal Health or generate 10.28% 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. Atmos Energy
Performance |
| Timeline |
| Cardinal Health |
| Atmos Energy |
Cardinal Health and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Atmos Energy
The main advantage of trading using opposite Cardinal Health and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
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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