Correlation Between ECGI Holdings and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both ECGI Holdings 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 ECGI Holdings and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECGI Holdings and Cardinal Health, you can compare the effects of market volatilities on ECGI Holdings 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 ECGI Holdings with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECGI Holdings and Cardinal Health.
Diversification Opportunities for ECGI Holdings and Cardinal Health
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECGI and Cardinal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ECGI Holdings and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and ECGI Holdings 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 ECGI Holdings 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 ECGI Holdings i.e., ECGI Holdings and Cardinal Health go up and down completely randomly.
Pair Corralation between ECGI Holdings and Cardinal Health
Given the investment horizon of 90 days ECGI Holdings is expected to generate 7.89 times more return on investment than Cardinal Health. However, ECGI Holdings is 7.89 times more volatile than Cardinal Health. It trades about 0.07 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.26 per unit of risk. If you would invest 0.13 in ECGI Holdings on September 1, 2024 and sell it today you would lose (0.02) from holding ECGI Holdings or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECGI Holdings vs. Cardinal Health
Performance |
| Timeline |
| ECGI Holdings |
| Cardinal Health |
ECGI Holdings and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECGI Holdings and Cardinal Health
The main advantage of trading using opposite ECGI Holdings and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECGI Holdings 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.| ECGI Holdings vs. Tandem Diabetes Care | ECGI Holdings vs. Transportadora de Gas | ECGI Holdings vs. Aris Water Solutions | ECGI Holdings vs. Catalent |
| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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