Correlation Between Cardinal Health and WT Offshore
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and WT Offshore 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 WT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and WT Offshore, you can compare the effects of market volatilities on Cardinal Health and WT Offshore 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 WT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and WT Offshore.
Diversification Opportunities for Cardinal Health and WT Offshore
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and WTI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore 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 WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Cardinal Health i.e., Cardinal Health and WT Offshore go up and down completely randomly.
Pair Corralation between Cardinal Health and WT Offshore
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.44 times more return on investment than WT Offshore. However, Cardinal Health is 2.27 times less risky than WT Offshore. It trades about 0.05 of its potential returns per unit of risk. WT Offshore is currently generating about -0.04 per unit of risk. If you would invest 10,494 in Cardinal Health on September 4, 2024 and sell it today you would earn a total of 1,833 from holding Cardinal Health or generate 17.47% 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. WT Offshore
Performance |
| Timeline |
| Cardinal Health |
| WT Offshore |
Cardinal Health and WT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and WT Offshore
The main advantage of trading using opposite Cardinal Health and WT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, WT Offshore 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 WT Offshore will offset losses from the drop in WT Offshore's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| WT Offshore vs. Evolution Petroleum | WT Offshore vs. Ring Energy | WT Offshore vs. Gran Tierra Energy | WT Offshore vs. PEDEVCO Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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