Correlation Between Cardinal Health and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Sumitomo Electric 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 Sumitomo Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Sumitomo Electric Industries, you can compare the effects of market volatilities on Cardinal Health and Sumitomo Electric 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Sumitomo Electric.
Diversification Opportunities for Cardinal Health and Sumitomo Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cardinal and Sumitomo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Electric 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Cardinal Health i.e., Cardinal Health and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Cardinal Health and Sumitomo Electric
Considering the 90-day investment horizon Cardinal Health is expected to generate 2.28 times less return on investment than Sumitomo Electric. In addition to that, Cardinal Health is 1.29 times more volatile than Sumitomo Electric Industries. It trades about 0.04 of its total potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.13 per unit of volatility. If you would invest 1,169 in Sumitomo Electric Industries on September 14, 2024 and sell it today you would earn a total of 488.00 from holding Sumitomo Electric Industries or generate 41.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Sumitomo Electric Industries
Performance |
| Timeline |
| Cardinal Health |
| Sumitomo Electric |
Cardinal Health and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Sumitomo Electric
The main advantage of trading using opposite Cardinal Health and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Sumitomo Electric 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Sumitomo Electric vs. FitLife Brands, Common | Sumitomo Electric vs. Cardinal Health | Sumitomo Electric vs. Sea | Sumitomo Electric vs. Getty Realty |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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