Correlation Between Cardinal Health and CVS Health
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and CVS 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 Cardinal Health and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and CVS Health, you can compare the effects of market volatilities on Cardinal Health and CVS 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 Cardinal Health with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and CVS Health.
Diversification Opportunities for Cardinal Health and CVS Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cardinal and CVS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Cardinal Health i.e., Cardinal Health and CVS Health go up and down completely randomly.
Pair Corralation between Cardinal Health and CVS Health
Assuming the 90 days horizon Cardinal Health is expected to generate 0.71 times more return on investment than CVS Health. However, Cardinal Health is 1.4 times less risky than CVS Health. It trades about 0.24 of its potential returns per unit of risk. CVS Health is currently generating about 0.06 per unit of risk. If you would invest 10,250 in Cardinal Health on August 27, 2024 and sell it today you would earn a total of 1,495 from holding Cardinal Health or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. CVS Health
Performance |
| Timeline |
| Cardinal Health |
| CVS Health |
Cardinal Health and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and CVS Health
The main advantage of trading using opposite Cardinal Health and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, CVS 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 CVS Health will offset losses from the drop in CVS Health's long position.| Cardinal Health vs. Westinghouse Air Brake | Cardinal Health vs. CompuGroup Medical SE | Cardinal Health vs. Chongqing Machinery Electric | Cardinal Health vs. DELTA AIR LINES |
| CVS Health vs. Apollo Investment Corp | CVS Health vs. Genco Shipping Trading | CVS Health vs. Gladstone Investment | CVS Health vs. NISSAN CHEMICAL IND |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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