Correlation Between CARDINAL HEALTH and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on CARDINAL HEALTH and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and ORMAT TECHNOLOGIES.
Diversification Opportunities for CARDINAL HEALTH and ORMAT TECHNOLOGIES
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CARDINAL and ORMAT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and ORMAT TECHNOLOGIES
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.7 times more return on investment than ORMAT TECHNOLOGIES. However, CARDINAL HEALTH is 1.42 times less risky than ORMAT TECHNOLOGIES. It trades about 0.1 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.02 per unit of risk. If you would invest 6,714 in CARDINAL HEALTH on October 25, 2024 and sell it today you would earn a total of 5,551 from holding CARDINAL HEALTH or generate 82.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CARDINAL HEALTH vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| CARDINAL HEALTH |
| ORMAT TECHNOLOGIES |
CARDINAL HEALTH and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and ORMAT TECHNOLOGIES
The main advantage of trading using opposite CARDINAL HEALTH and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES'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 |
| ORMAT TECHNOLOGIES vs. STGEORGE MINING LTD | ORMAT TECHNOLOGIES vs. Apollo Investment Corp | ORMAT TECHNOLOGIES vs. Harmony Gold Mining | ORMAT TECHNOLOGIES vs. SLR Investment Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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