Correlation Between AECOM TECHNOLOGY and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Cardinal Health, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Cardinal Health.
Diversification Opportunities for AECOM TECHNOLOGY and Cardinal Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AECOM and Cardinal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Cardinal Health go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Cardinal Health
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 2.56 times less return on investment than Cardinal Health. But when comparing it to its historical volatility, AECOM TECHNOLOGY is 1.08 times less risky than Cardinal Health. It trades about 0.03 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,123 in Cardinal Health on October 31, 2024 and sell it today you would earn a total of 5,362 from holding Cardinal Health or generate 75.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Cardinal Health
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Cardinal Health |
AECOM TECHNOLOGY and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Cardinal Health
The main advantage of trading using opposite AECOM TECHNOLOGY and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. FANDIFI TECHNOLOGY P | AECOM TECHNOLOGY vs. Japan Post Insurance | AECOM TECHNOLOGY vs. Ribbon Communications | AECOM TECHNOLOGY vs. ZURICH INSURANCE GROUP |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Shanghai Pharmaceuticals Holding | Cardinal Health vs. Sinopharm Group Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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