Correlation Between Cardinal Health and SunOpta
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and SunOpta 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 SunOpta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and SunOpta, you can compare the effects of market volatilities on Cardinal Health and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and SunOpta.
Diversification Opportunities for Cardinal Health and SunOpta
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and SunOpta is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Cardinal Health i.e., Cardinal Health and SunOpta go up and down completely randomly.
Pair Corralation between Cardinal Health and SunOpta
Considering the 90-day investment horizon Cardinal Health is expected to generate 3.11 times less return on investment than SunOpta. But when comparing it to its historical volatility, Cardinal Health is 2.54 times less risky than SunOpta. It trades about 0.1 of its potential returns per unit of risk. SunOpta is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 599.00 in SunOpta on August 29, 2024 and sell it today you would earn a total of 180.00 from holding SunOpta or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. SunOpta
Performance |
| Timeline |
| Cardinal Health |
| SunOpta |
Cardinal Health and SunOpta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and SunOpta
The main advantage of trading using opposite Cardinal Health and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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