Correlation Between CARDINAL HEALTH and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and Advanced Medical 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 Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Advanced Medical Solutions, you can compare the effects of market volatilities on CARDINAL HEALTH and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Advanced Medical.
Diversification Opportunities for CARDINAL HEALTH and Advanced Medical
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CARDINAL and Advanced is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Advanced Medical go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and Advanced Medical
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 1.03 times less return on investment than Advanced Medical. But when comparing it to its historical volatility, CARDINAL HEALTH is 2.03 times less risky than Advanced Medical. It trades about 0.19 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Advanced Medical Solutions on October 25, 2024 and sell it today you would earn a total of 38.00 from holding Advanced Medical Solutions or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARDINAL HEALTH vs. Advanced Medical Solutions
Performance |
| Timeline |
| CARDINAL HEALTH |
| Advanced Medical Sol |
CARDINAL HEALTH and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and Advanced Medical
The main advantage of trading using opposite CARDINAL HEALTH and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| CARDINAL HEALTH vs. Zoom Video Communications | CARDINAL HEALTH vs. Planet Fitness | CARDINAL HEALTH vs. New Residential Investment | CARDINAL HEALTH vs. OPKO HEALTH |
| Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc | Advanced Medical vs. Apple Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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