Correlation Between FC Investment and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both FC Investment 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 FC Investment and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FC Investment Trust and Cardinal Health, you can compare the effects of market volatilities on FC Investment 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 FC Investment with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of FC Investment and Cardinal Health.
Diversification Opportunities for FC Investment and Cardinal Health
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FCIT and Cardinal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding FC Investment Trust and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and FC Investment 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 FC Investment Trust 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 FC Investment i.e., FC Investment and Cardinal Health go up and down completely randomly.
Pair Corralation between FC Investment and Cardinal Health
Assuming the 90 days trading horizon FC Investment Trust is expected to generate 0.89 times more return on investment than Cardinal Health. However, FC Investment Trust is 1.13 times less risky than Cardinal Health. It trades about 0.27 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.22 per unit of risk. If you would invest 113,000 in FC Investment Trust on November 6, 2024 and sell it today you would earn a total of 5,800 from holding FC Investment Trust or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FC Investment Trust vs. Cardinal Health
Performance |
| Timeline |
| FC Investment Trust |
| Cardinal Health |
FC Investment and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FC Investment and Cardinal Health
The main advantage of trading using opposite FC Investment and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FC Investment 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.| FC Investment vs. Kinnevik Investment AB | FC Investment vs. Edinburgh Investment Trust | FC Investment vs. Lowland Investment Co | FC Investment vs. Livermore Investments Group |
| Cardinal Health vs. Jacquet Metal Service | Cardinal Health vs. Cornish Metals | Cardinal Health vs. Applied Materials | Cardinal Health vs. Tata Steel Limited |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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