Correlation Between Cardinal Health and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and NORWEGIAN AIR 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 NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on Cardinal Health and NORWEGIAN AIR 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 NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and NORWEGIAN AIR.
Diversification Opportunities for Cardinal Health and NORWEGIAN AIR
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and NORWEGIAN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT 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 NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of Cardinal Health i.e., Cardinal Health and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between Cardinal Health and NORWEGIAN AIR
Assuming the 90 days horizon Cardinal Health is expected to generate 0.64 times more return on investment than NORWEGIAN AIR. However, Cardinal Health is 1.57 times less risky than NORWEGIAN AIR. It trades about 0.1 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about -0.02 per unit of risk. If you would invest 9,827 in Cardinal Health on September 20, 2024 and sell it today you would earn a total of 1,163 from holding Cardinal Health or generate 11.83% 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. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| Cardinal Health |
| NORWEGIAN AIR SHUT |
Cardinal Health and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and NORWEGIAN AIR
The main advantage of trading using opposite Cardinal Health and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.| Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings | Cardinal Health vs. SIVERS SEMICONDUCTORS AB | Cardinal Health vs. NorAm Drilling AS |
| NORWEGIAN AIR vs. VIVA WINE GROUP | NORWEGIAN AIR vs. Spirent Communications plc | NORWEGIAN AIR vs. Charter Communications | NORWEGIAN AIR vs. Gamma Communications plc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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