Correlation Between Cincinnati Financial and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Cincinnati Financial and Cardinal Health 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 Cincinnati Financial and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cincinnati Financial and Cardinal Health, you can compare the effects of market volatilities on Cincinnati Financial and Cardinal Health 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 Cincinnati Financial with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cincinnati Financial and Cardinal Health.
Diversification Opportunities for Cincinnati Financial and Cardinal Health
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cincinnati and Cardinal is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cincinnati Financial and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Cincinnati Financial 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 Cincinnati Financial are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Cincinnati Financial i.e., Cincinnati Financial and Cardinal Health go up and down completely randomly.
Pair Corralation between Cincinnati Financial and Cardinal Health
Given the investment horizon of 90 days Cincinnati Financial is expected to under-perform the Cardinal Health. In addition to that, Cincinnati Financial is 1.13 times more volatile than Cardinal Health. It trades about -0.11 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.14 per unit of volatility. If you would invest 11,930 in Cardinal Health on November 4, 2024 and sell it today you would earn a total of 436.00 from holding Cardinal Health or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cincinnati Financial vs. Cardinal Health
Performance |
| Timeline |
| Cincinnati Financial |
| Cardinal Health |
Cincinnati Financial and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cincinnati Financial and Cardinal Health
The main advantage of trading using opposite Cincinnati Financial and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cincinnati Financial position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Cincinnati Financial vs. Progressive Corp | Cincinnati Financial vs. The Travelers Companies | Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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