Correlation Between Cardinal Health and Natural Health
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Natural 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 Natural 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 Natural Health Trends, you can compare the effects of market volatilities on Cardinal Health and Natural 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Natural Health.
Diversification Opportunities for Cardinal Health and Natural Health
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cardinal and Natural is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Cardinal Health i.e., Cardinal Health and Natural Health go up and down completely randomly.
Pair Corralation between Cardinal Health and Natural Health
Assuming the 90 days horizon Cardinal Health is expected to generate 0.71 times more return on investment than Natural Health. However, Cardinal Health is 1.42 times less risky than Natural Health. It trades about 0.07 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.05 per unit of risk. If you would invest 8,407 in Cardinal Health on August 28, 2024 and sell it today you would earn a total of 3,338 from holding Cardinal Health or generate 39.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Cardinal Health vs. Natural Health Trends
Performance |
| Timeline |
| Cardinal Health |
| Natural Health Trends |
Cardinal Health and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Natural Health
The main advantage of trading using opposite Cardinal Health and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Natural 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 Natural Health will offset losses from the drop in Natural Health's long position.| Cardinal Health vs. Singapore Telecommunications Limited | Cardinal Health vs. BW OFFSHORE LTD | Cardinal Health vs. Computer And Technologies | Cardinal Health vs. HEMISPHERE EGY |
| Natural Health vs. Fast Retailing Co | Natural Health vs. Burlington Stores | Natural Health vs. Ross Stores | Natural Health vs. RETAIL FOOD GROUP |
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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