Correlation Between CARDINAL HEALTH and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and Federal Agricultural 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 Federal Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Federal Agricultural Mortgage, you can compare the effects of market volatilities on CARDINAL HEALTH and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Federal Agricultural.
Diversification Opportunities for CARDINAL HEALTH and Federal Agricultural
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CARDINAL and Federal is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Federal Agricultural go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and Federal Agricultural
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.71 times more return on investment than Federal Agricultural. However, CARDINAL HEALTH is 1.41 times less risky than Federal Agricultural. It trades about 0.17 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.06 per unit of risk. If you would invest 9,949 in CARDINAL HEALTH on October 18, 2024 and sell it today you would earn a total of 2,066 from holding CARDINAL HEALTH or generate 20.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARDINAL HEALTH vs. Federal Agricultural Mortgage
Performance |
| Timeline |
| CARDINAL HEALTH |
| Federal Agricultural |
CARDINAL HEALTH and Federal Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and Federal Agricultural
The main advantage of trading using opposite CARDINAL HEALTH and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.| CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc |
| Federal Agricultural vs. Cardinal Health | Federal Agricultural vs. EPSILON HEALTHCARE LTD | Federal Agricultural vs. CARDINAL HEALTH | Federal Agricultural vs. Acadia Healthcare |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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