Correlation Between Cardinal Health and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and GAMESTOP 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 GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and GAMESTOP, you can compare the effects of market volatilities on Cardinal Health and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and GAMESTOP.
Diversification Opportunities for Cardinal Health and GAMESTOP
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cardinal and GAMESTOP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of Cardinal Health i.e., Cardinal Health and GAMESTOP go up and down completely randomly.
Pair Corralation between Cardinal Health and GAMESTOP
Assuming the 90 days horizon Cardinal Health is expected to generate 3.05 times less return on investment than GAMESTOP. But when comparing it to its historical volatility, Cardinal Health is 1.81 times less risky than GAMESTOP. It trades about 0.17 of its potential returns per unit of risk. GAMESTOP is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,047 in GAMESTOP on September 4, 2024 and sell it today you would earn a total of 553.00 from holding GAMESTOP or generate 27.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cardinal Health vs. GAMESTOP
Performance |
| Timeline |
| Cardinal Health |
| GAMESTOP |
Cardinal Health and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and GAMESTOP
The main advantage of trading using opposite Cardinal Health and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.| Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings | Cardinal Health vs. Origin Agritech | Cardinal Health vs. SIVERS SEMICONDUCTORS AB |
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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