Correlation Between Cardinal Health and PGE
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and PGE 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 PGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and PGE Corporation, you can compare the effects of market volatilities on Cardinal Health and PGE 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 PGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and PGE.
Diversification Opportunities for Cardinal Health and PGE
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cardinal and PGE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and PGE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGE Corporation 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 PGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGE Corporation has no effect on the direction of Cardinal Health i.e., Cardinal Health and PGE go up and down completely randomly.
Pair Corralation between Cardinal Health and PGE
Assuming the 90 days horizon Cardinal Health is expected to generate 1.28 times more return on investment than PGE. However, Cardinal Health is 1.28 times more volatile than PGE Corporation. It trades about 0.13 of its potential returns per unit of risk. PGE Corporation is currently generating about 0.11 per unit of risk. If you would invest 8,932 in Cardinal Health on September 3, 2024 and sell it today you would earn a total of 2,638 from holding Cardinal Health or generate 29.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. PGE Corp.
Performance |
| Timeline |
| Cardinal Health |
| PGE Corporation |
Cardinal Health and PGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and PGE
The main advantage of trading using opposite Cardinal Health and PGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, PGE 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 PGE will offset losses from the drop in PGE's long position.| Cardinal Health vs. AmerisourceBergen | Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings | Cardinal Health 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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