Correlation Between Cardinal Health and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and BJs Restaurants, you can compare the effects of market volatilities on Cardinal Health and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and BJs Restaurants.
Diversification Opportunities for Cardinal Health and BJs Restaurants
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and BJs is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Cardinal Health i.e., Cardinal Health and BJs Restaurants go up and down completely randomly.
Pair Corralation between Cardinal Health and BJs Restaurants
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.81 times more return on investment than BJs Restaurants. However, Cardinal Health is 1.23 times less risky than BJs Restaurants. It trades about 0.2 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.07 per unit of risk. If you would invest 11,087 in Cardinal Health on August 27, 2024 and sell it today you would earn a total of 1,090 from holding Cardinal Health or generate 9.83% 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. BJs Restaurants
Performance |
| Timeline |
| Cardinal Health |
| BJs Restaurants |
Cardinal Health and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and BJs Restaurants
The main advantage of trading using opposite Cardinal Health and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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