Correlation Between Cardinal Health and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and CARSALESCOM 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 CARSALESCOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and CARSALESCOM, you can compare the effects of market volatilities on Cardinal Health and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and CARSALESCOM.
Diversification Opportunities for Cardinal Health and CARSALESCOM
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cardinal and CARSALESCOM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Cardinal Health i.e., Cardinal Health and CARSALESCOM go up and down completely randomly.
Pair Corralation between Cardinal Health and CARSALESCOM
Assuming the 90 days horizon Cardinal Health is expected to generate 2.02 times more return on investment than CARSALESCOM. However, Cardinal Health is 2.02 times more volatile than CARSALESCOM. It trades about 0.21 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.36 per unit of risk. If you would invest 10,250 in Cardinal Health on August 29, 2024 and sell it today you would earn a total of 1,335 from holding Cardinal Health or generate 13.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. CARSALESCOM
Performance |
| Timeline |
| Cardinal Health |
| CARSALESCOM |
Cardinal Health and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and CARSALESCOM
The main advantage of trading using opposite Cardinal Health and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM'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 |
| CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Microsoft | CARSALESCOM vs. Microsoft |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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