Correlation Between Gap, and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Gap, 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 Gap, and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap, and Cardinal Health, you can compare the effects of market volatilities on Gap, 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 Gap, with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and Cardinal Health.
Diversification Opportunities for Gap, and Cardinal Health
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gap, and Cardinal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Gap, 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 The Gap, 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 Gap, i.e., Gap, and Cardinal Health go up and down completely randomly.
Pair Corralation between Gap, and Cardinal Health
Considering the 90-day investment horizon The Gap, is expected to generate 1.55 times more return on investment than Cardinal Health. However, Gap, is 1.55 times more volatile than Cardinal Health. It trades about 0.2 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.2 per unit of risk. If you would invest 2,161 in The Gap, on August 26, 2024 and sell it today you would earn a total of 326.00 from holding The Gap, or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Gap, vs. Cardinal Health
Performance |
| Timeline |
| Gap, |
| Cardinal Health |
Gap, and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap, and Cardinal Health
The main advantage of trading using opposite Gap, and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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.| Gap, vs. Tyson Foods | Gap, vs. Natural Alternatives International | Gap, vs. FitLife Brands, Common | Gap, vs. National CineMedia |
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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