Correlation Between CARDINAL HEALTH and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and SBM OFFSHORE 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 SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and SBM OFFSHORE, you can compare the effects of market volatilities on CARDINAL HEALTH and SBM OFFSHORE 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 SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and SBM OFFSHORE.
Diversification Opportunities for CARDINAL HEALTH and SBM OFFSHORE
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CARDINAL and SBM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and SBM OFFSHORE
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 1.01 times more return on investment than SBM OFFSHORE. However, CARDINAL HEALTH is 1.01 times more volatile than SBM OFFSHORE. It trades about 0.16 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.04 per unit of risk. If you would invest 11,494 in CARDINAL HEALTH on October 11, 2024 and sell it today you would earn a total of 336.00 from holding CARDINAL HEALTH or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARDINAL HEALTH vs. SBM OFFSHORE
Performance |
| Timeline |
| CARDINAL HEALTH |
| SBM OFFSHORE |
CARDINAL HEALTH and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARDINAL HEALTH and SBM OFFSHORE
The main advantage of trading using opposite CARDINAL HEALTH and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| CARDINAL HEALTH vs. Nordic Semiconductor ASA | CARDINAL HEALTH vs. SOCKET MOBILE NEW | CARDINAL HEALTH vs. BE Semiconductor Industries | CARDINAL HEALTH vs. Entravision Communications |
| SBM OFFSHORE vs. NIGHTINGALE HEALTH EO | SBM OFFSHORE vs. Zoom Video Communications | SBM OFFSHORE vs. Singapore Telecommunications Limited | SBM OFFSHORE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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