Correlation Between Cardinal Health and Media
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Media 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 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Media and Games, you can compare the effects of market volatilities on Cardinal Health and Media 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 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Media.
Diversification Opportunities for Cardinal Health and Media
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Media is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Cardinal Health i.e., Cardinal Health and Media go up and down completely randomly.
Pair Corralation between Cardinal Health and Media
Assuming the 90 days horizon Cardinal Health is expected to generate 1.75 times less return on investment than Media. But when comparing it to its historical volatility, Cardinal Health is 2.64 times less risky than Media. It trades about 0.08 of its potential returns per unit of risk. Media and Games is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 160.00 in Media and Games on October 30, 2024 and sell it today you would earn a total of 144.00 from holding Media and Games or generate 90.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Media and Games
Performance |
| Timeline |
| Cardinal Health |
| Media and Games |
Cardinal Health and Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Media
The main advantage of trading using opposite Cardinal Health and Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Media 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 Media will offset losses from the drop in Media's long position.| Cardinal Health vs. AECOM TECHNOLOGY | Cardinal Health vs. SCOTT TECHNOLOGY | Cardinal Health vs. Easy Software AG | Cardinal Health vs. GRIFFIN MINING LTD |
| Media vs. ALTAIR RES INC | Media vs. Air Transport Services | Media vs. Westinghouse Air Brake | Media vs. SOEDER SPORTFISKE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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