Correlation Between Cardinal Health and NAKED WINES
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and NAKED WINES 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 NAKED WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and NAKED WINES PLC, you can compare the effects of market volatilities on Cardinal Health and NAKED WINES 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 NAKED WINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and NAKED WINES.
Diversification Opportunities for Cardinal Health and NAKED WINES
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cardinal and NAKED is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and NAKED WINES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAKED WINES PLC 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 NAKED WINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAKED WINES PLC has no effect on the direction of Cardinal Health i.e., Cardinal Health and NAKED WINES go up and down completely randomly.
Pair Corralation between Cardinal Health and NAKED WINES
Assuming the 90 days horizon Cardinal Health is expected to generate 0.35 times more return on investment than NAKED WINES. However, Cardinal Health is 2.9 times less risky than NAKED WINES. It trades about 0.08 of its potential returns per unit of risk. NAKED WINES PLC is currently generating about -0.02 per unit of risk. If you would invest 7,651 in Cardinal Health on September 1, 2024 and sell it today you would earn a total of 3,944 from holding Cardinal Health or generate 51.55% 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. NAKED WINES PLC
Performance |
| Timeline |
| Cardinal Health |
| NAKED WINES PLC |
Cardinal Health and NAKED WINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and NAKED WINES
The main advantage of trading using opposite Cardinal Health and NAKED WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, NAKED WINES 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 NAKED WINES will offset losses from the drop in NAKED WINES's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Shanghai Pharmaceuticals Holding | Cardinal Health vs. Sinopharm Group Co | Cardinal Health vs. SINOPHARM GROUP 15ON |
| NAKED WINES vs. ANDREW PELLER LTD | NAKED WINES vs. Superior Plus Corp | NAKED WINES vs. NMI Holdings | NAKED WINES vs. Origin Agritech |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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