Correlation Between Cardinal Health and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Niagara Mohawk Power, you can compare the effects of market volatilities on Cardinal Health and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Niagara Mohawk.
Diversification Opportunities for Cardinal Health and Niagara Mohawk
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Niagara is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Cardinal Health i.e., Cardinal Health and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Cardinal Health and Niagara Mohawk
Considering the 90-day investment horizon Cardinal Health is expected to generate 3.22 times less return on investment than Niagara Mohawk. But when comparing it to its historical volatility, Cardinal Health is 6.16 times less risky than Niagara Mohawk. It trades about 0.5 of its potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,851 in Niagara Mohawk Power on October 25, 2024 and sell it today you would earn a total of 1,649 from holding Niagara Mohawk Power or generate 28.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Niagara Mohawk Power
Performance |
| Timeline |
| Cardinal Health |
| Niagara Mohawk Power |
Cardinal Health and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Niagara Mohawk
The main advantage of trading using opposite Cardinal Health and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Niagara Mohawk vs. Old Dominion Freight | Niagara Mohawk vs. Asbury Automotive Group | Niagara Mohawk vs. Titan Machinery | Niagara Mohawk vs. Cedar Realty Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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