Correlation Between CarsalesCom and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both CarsalesCom 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 CarsalesCom and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom Ltd ADR and Cardinal Health, you can compare the effects of market volatilities on CarsalesCom 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 CarsalesCom with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Cardinal Health.
Diversification Opportunities for CarsalesCom and Cardinal Health
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CarsalesCom and Cardinal is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and CarsalesCom 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 CarsalesCom Ltd ADR 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 CarsalesCom i.e., CarsalesCom and Cardinal Health go up and down completely randomly.
Pair Corralation between CarsalesCom and Cardinal Health
Assuming the 90 days horizon CarsalesCom is expected to generate 1.28 times less return on investment than Cardinal Health. In addition to that, CarsalesCom is 1.64 times more volatile than Cardinal Health. It trades about 0.03 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.05 per unit of volatility. If you would invest 10,872 in Cardinal Health on August 23, 2024 and sell it today you would earn a total of 1,470 from holding Cardinal Health or generate 13.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.83% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. Cardinal Health
Performance |
| Timeline |
| CarsalesCom ADR |
| Cardinal Health |
CarsalesCom and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Cardinal Health
The main advantage of trading using opposite CarsalesCom and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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.| CarsalesCom vs. Quizam Media | CarsalesCom vs. DGTL Holdings | CarsalesCom vs. Tinybeans Group Limited | CarsalesCom vs. Sabio Holdings |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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