Correlation Between Cardinal Health and HealthCare
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and HealthCare 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 HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and HealthCare, you can compare the effects of market volatilities on Cardinal Health and HealthCare 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 HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and HealthCare.
Diversification Opportunities for Cardinal Health and HealthCare
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and HealthCare is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthCare 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 HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthCare has no effect on the direction of Cardinal Health i.e., Cardinal Health and HealthCare go up and down completely randomly.
Pair Corralation between Cardinal Health and HealthCare
Considering the 90-day investment horizon Cardinal Health is expected to generate 1.19 times more return on investment than HealthCare. However, Cardinal Health is 1.19 times more volatile than HealthCare. It trades about 0.41 of its potential returns per unit of risk. HealthCare is currently generating about -0.23 per unit of risk. If you would invest 11,776 in Cardinal Health on November 1, 2024 and sell it today you would earn a total of 1,086 from holding Cardinal Health or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Cardinal Health vs. HealthCare
Performance |
| Timeline |
| Cardinal Health |
| HealthCare |
Cardinal Health and HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and HealthCare
The main advantage of trading using opposite Cardinal Health and HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, HealthCare 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 HealthCare will offset losses from the drop in HealthCare's long position.| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene Corp |
| HealthCare vs. The Joint Corp | HealthCare vs. LENSAR Inc | HealthCare vs. Cardinal Health | HealthCare vs. Merit Medical Systems |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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