Correlation Between Cardinal Health and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and SEI Investments 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 SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and SEI Investments, you can compare the effects of market volatilities on Cardinal Health and SEI Investments 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 SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and SEI Investments.
Diversification Opportunities for Cardinal Health and SEI Investments
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cardinal and SEI is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments 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 SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Cardinal Health i.e., Cardinal Health and SEI Investments go up and down completely randomly.
Pair Corralation between Cardinal Health and SEI Investments
Considering the 90-day investment horizon Cardinal Health is expected to generate 1.2 times more return on investment than SEI Investments. However, Cardinal Health is 1.2 times more volatile than SEI Investments. It trades about 0.08 of its potential returns per unit of risk. SEI Investments is currently generating about 0.06 per unit of risk. If you would invest 7,522 in Cardinal Health on September 4, 2024 and sell it today you would earn a total of 4,805 from holding Cardinal Health or generate 63.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. SEI Investments
Performance |
| Timeline |
| Cardinal Health |
| SEI Investments |
Cardinal Health and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and SEI Investments
The main advantage of trading using opposite Cardinal Health and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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