Correlation Between Cheniere Energy and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Cheniere Energy and Cardinal 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 Cheniere Energy and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheniere Energy Partners and Cardinal Health, you can compare the effects of market volatilities on Cheniere Energy and Cardinal 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 Cheniere Energy with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheniere Energy and Cardinal Health.
Diversification Opportunities for Cheniere Energy and Cardinal Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cheniere and Cardinal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Cheniere Energy 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 Cheniere Energy Partners are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Cardinal Health go up and down completely randomly.
Pair Corralation between Cheniere Energy and Cardinal Health
Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.87 times more return on investment than Cardinal Health. However, Cheniere Energy Partners is 1.15 times less risky than Cardinal Health. It trades about 0.25 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of risk. If you would invest 4,748 in Cheniere Energy Partners on September 2, 2024 and sell it today you would earn a total of 1,077 from holding Cheniere Energy Partners or generate 22.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheniere Energy Partners vs. Cardinal Health
Performance |
| Timeline |
| Cheniere Energy Partners |
| Cardinal Health |
Cheniere Energy and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheniere Energy and Cardinal Health
The main advantage of trading using opposite Cheniere Energy and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheniere Energy position performs unexpectedly, Cardinal 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Cheniere Energy vs. Plains All American | Cheniere Energy vs. Hess Midstream Partners | Cheniere Energy vs. Plains GP Holdings | Cheniere Energy vs. Antero Midstream Partners |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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