Correlation Between Cardinal Health and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and AMCON Distributing, you can compare the effects of market volatilities on Cardinal Health and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and AMCON Distributing.
Diversification Opportunities for Cardinal Health and AMCON Distributing
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cardinal and AMCON is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Cardinal Health i.e., Cardinal Health and AMCON Distributing go up and down completely randomly.
Pair Corralation between Cardinal Health and AMCON Distributing
Considering the 90-day investment horizon Cardinal Health is expected to generate 1.12 times less return on investment than AMCON Distributing. But when comparing it to its historical volatility, Cardinal Health is 2.29 times less risky than AMCON Distributing. It trades about 0.26 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11,987 in AMCON Distributing on September 1, 2024 and sell it today you would earn a total of 1,420 from holding AMCON Distributing or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. AMCON Distributing
Performance |
| Timeline |
| Cardinal Health |
| AMCON Distributing |
Cardinal Health and AMCON Distributing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and AMCON Distributing
The main advantage of trading using opposite Cardinal Health and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's long position.| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene Corp |
| AMCON Distributing vs. The Chefs Warehouse | AMCON Distributing vs. G Willi Food International | AMCON Distributing vs. SpartanNash Co | AMCON Distributing vs. Calavo Growers |
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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