Correlation Between Cardinal Health and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Bel Fuse 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 Bel Fuse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Bel Fuse A, you can compare the effects of market volatilities on Cardinal Health and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Bel Fuse.
Diversification Opportunities for Cardinal Health and Bel Fuse
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cardinal and Bel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of Cardinal Health i.e., Cardinal Health and Bel Fuse go up and down completely randomly.
Pair Corralation between Cardinal Health and Bel Fuse
Considering the 90-day investment horizon Cardinal Health is expected to under-perform the Bel Fuse. But the stock apears to be less risky and, when comparing its historical volatility, Cardinal Health is 2.23 times less risky than Bel Fuse. The stock trades about -0.11 of its potential returns per unit of risk. The Bel Fuse A is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 8,601 in Bel Fuse A on November 28, 2024 and sell it today you would lose (22.00) from holding Bel Fuse A or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Bel Fuse A
Performance |
| Timeline |
| Cardinal Health |
| Bel Fuse A |
Cardinal Health and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Bel Fuse
The main advantage of trading using opposite Cardinal Health and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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