Correlation Between Cardinal Health and Mitsubishi UFJ
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Mitsubishi UFJ 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 Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Mitsubishi UFJ Lease, you can compare the effects of market volatilities on Cardinal Health and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Mitsubishi UFJ.
Diversification Opportunities for Cardinal Health and Mitsubishi UFJ
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cardinal and Mitsubishi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Mitsubishi UFJ Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Lease 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 Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Lease has no effect on the direction of Cardinal Health i.e., Cardinal Health and Mitsubishi UFJ go up and down completely randomly.
Pair Corralation between Cardinal Health and Mitsubishi UFJ
Considering the 90-day investment horizon Cardinal Health is expected to generate 2.3 times less return on investment than Mitsubishi UFJ. But when comparing it to its historical volatility, Cardinal Health is 3.55 times less risky than Mitsubishi UFJ. It trades about 0.08 of its potential returns per unit of risk. Mitsubishi UFJ Lease is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 848.00 in Mitsubishi UFJ Lease on August 31, 2024 and sell it today you would earn a total of 348.00 from holding Mitsubishi UFJ Lease or generate 41.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 54.01% |
| Values | Daily Returns |
Cardinal Health vs. Mitsubishi UFJ Lease
Performance |
| Timeline |
| Cardinal Health |
| Mitsubishi UFJ Lease |
Cardinal Health and Mitsubishi UFJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Mitsubishi UFJ
The main advantage of trading using opposite Cardinal Health and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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