Correlation Between Cardinal Health and Clean Energy
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Clean Energy 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 Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Clean Energy Fuels, you can compare the effects of market volatilities on Cardinal Health and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Clean Energy.
Diversification Opportunities for Cardinal Health and Clean Energy
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Clean is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of Cardinal Health i.e., Cardinal Health and Clean Energy go up and down completely randomly.
Pair Corralation between Cardinal Health and Clean Energy
Assuming the 90 days horizon Cardinal Health is expected to generate 0.4 times more return on investment than Clean Energy. However, Cardinal Health is 2.52 times less risky than Clean Energy. It trades about 0.06 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.03 per unit of risk. If you would invest 7,259 in Cardinal Health on August 24, 2024 and sell it today you would earn a total of 3,886 from holding Cardinal Health or generate 53.53% 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. Clean Energy Fuels
Performance |
| Timeline |
| Cardinal Health |
| Clean Energy Fuels |
Cardinal Health and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Clean Energy
The main advantage of trading using opposite Cardinal Health and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| Cardinal Health vs. Shanghai Pharmaceuticals Holding | Cardinal Health vs. Sinopharm Group Co | Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings |
| Clean Energy vs. Superior Plus Corp | Clean Energy vs. NMI Holdings | Clean Energy vs. Origin Agritech | Clean Energy vs. SIVERS SEMICONDUCTORS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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