Correlation Between Cardinal Health and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Natural Alternatives 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 Natural Alternatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Natural Alternatives International, you can compare the effects of market volatilities on Cardinal Health and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Natural Alternatives.
Diversification Opportunities for Cardinal Health and Natural Alternatives
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cardinal and Natural is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Cardinal Health i.e., Cardinal Health and Natural Alternatives go up and down completely randomly.
Pair Corralation between Cardinal Health and Natural Alternatives
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.41 times more return on investment than Natural Alternatives. However, Cardinal Health is 2.42 times less risky than Natural Alternatives. It trades about 0.06 of its potential returns per unit of risk. Natural Alternatives International is currently generating about -0.03 per unit of risk. If you would invest 9,178 in Cardinal Health on September 12, 2024 and sell it today you would earn a total of 2,864 from holding Cardinal Health or generate 31.21% 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. Natural Alternatives Internati
Performance |
| Timeline |
| Cardinal Health |
| Natural Alternatives |
Cardinal Health and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Natural Alternatives
The main advantage of trading using opposite Cardinal Health and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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