Correlation Between Cardinal Health and Fairwood Holdings
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Fairwood Holdings 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 Fairwood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Fairwood Holdings Limited, you can compare the effects of market volatilities on Cardinal Health and Fairwood Holdings 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 Fairwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Fairwood Holdings.
Diversification Opportunities for Cardinal Health and Fairwood Holdings
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cardinal and Fairwood is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Fairwood Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairwood Holdings 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 Fairwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairwood Holdings has no effect on the direction of Cardinal Health i.e., Cardinal Health and Fairwood Holdings go up and down completely randomly.
Pair Corralation between Cardinal Health and Fairwood Holdings
Considering the 90-day investment horizon Cardinal Health is expected to generate 7.93 times less return on investment than Fairwood Holdings. But when comparing it to its historical volatility, Cardinal Health is 3.27 times less risky than Fairwood Holdings. It trades about 0.06 of its potential returns per unit of risk. Fairwood Holdings Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Fairwood Holdings Limited on September 12, 2024 and sell it today you would earn a total of 33.00 from holding Fairwood Holdings Limited or generate 45.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Fairwood Holdings Limited
Performance |
| Timeline |
| Cardinal Health |
| Fairwood Holdings |
Cardinal Health and Fairwood Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Fairwood Holdings
The main advantage of trading using opposite Cardinal Health and Fairwood Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Fairwood Holdings 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 Fairwood Holdings will offset losses from the drop in Fairwood Holdings' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Fairwood Holdings vs. Meiwu Technology Co | Fairwood Holdings vs. Arrow Electronics | Fairwood Holdings vs. Independence Realty Trust | Fairwood Holdings vs. Inflection Point Acquisition |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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