Correlation Between Cardinal Health and Check Point
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Check Point 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 Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Check Point Software, you can compare the effects of market volatilities on Cardinal Health and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Check Point.
Diversification Opportunities for Cardinal Health and Check Point
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Check is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Cardinal Health i.e., Cardinal Health and Check Point go up and down completely randomly.
Pair Corralation between Cardinal Health and Check Point
Assuming the 90 days horizon Cardinal Health is expected to generate 1.14 times less return on investment than Check Point. But when comparing it to its historical volatility, Cardinal Health is 1.07 times less risky than Check Point. It trades about 0.06 of its potential returns per unit of risk. Check Point Software is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13,700 in Check Point Software on September 3, 2024 and sell it today you would earn a total of 3,525 from holding Check Point Software or generate 25.73% 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. Check Point Software
Performance |
| Timeline |
| Cardinal Health |
| Check Point Software |
Cardinal Health and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Check Point
The main advantage of trading using opposite Cardinal Health and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Cardinal Health vs. AmerisourceBergen | Cardinal Health vs. Sinopharm Group Co | Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings |
| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
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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