Correlation Between CARDINAL HEALTH and Bausch Health
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and Bausch Health 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 Bausch Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Bausch Health Companies, you can compare the effects of market volatilities on CARDINAL HEALTH and Bausch Health 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 Bausch Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Bausch Health.
Diversification Opportunities for CARDINAL HEALTH and Bausch Health
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between CARDINAL and Bausch is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Bausch Health go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and Bausch Health
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.5 times more return on investment than Bausch Health. However, CARDINAL HEALTH is 2.0 times less risky than Bausch Health. It trades about 0.19 of its potential returns per unit of risk. Bausch Health Companies is currently generating about 0.01 per unit of risk. If you would invest 10,304 in CARDINAL HEALTH on October 24, 2024 and sell it today you would earn a total of 1,941 from holding CARDINAL HEALTH or generate 18.84% 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. Bausch Health Companies
Performance |
| Timeline |
| CARDINAL HEALTH |
| Bausch Health Companies |
CARDINAL HEALTH and Bausch Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and Bausch Health
The main advantage of trading using opposite CARDINAL HEALTH and Bausch Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, Bausch Health 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 Bausch Health will offset losses from the drop in Bausch Health's long position.| CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc | CARDINAL HEALTH vs. Apple Inc |
| Bausch Health vs. Molina Healthcare | Bausch Health vs. CLOVER HEALTH INV | Bausch Health vs. National Beverage Corp | Bausch Health vs. Cardinal Health |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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