Correlation Between Performance Food and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Cardinal Health, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Cardinal Health.
Diversification Opportunities for Performance Food and Cardinal Health
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and Cardinal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Cardinal Health go up and down completely randomly.
Pair Corralation between Performance Food and Cardinal Health
Assuming the 90 days trading horizon Performance Food is expected to generate 1.29 times less return on investment than Cardinal Health. In addition to that, Performance Food is 1.02 times more volatile than Cardinal Health. It trades about 0.06 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of volatility. If you would invest 7,140 in Cardinal Health on October 30, 2024 and sell it today you would earn a total of 5,030 from holding Cardinal Health or generate 70.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Cardinal Health
Performance |
| Timeline |
| Performance Food |
| Cardinal Health |
Performance Food and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Cardinal Health
The main advantage of trading using opposite Performance Food and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. Titan Machinery | Performance Food vs. Hitachi Construction Machinery | Performance Food vs. Tokyu Construction Co | Performance Food vs. CAIRN HOMES EO |
| Cardinal Health vs. AECOM TECHNOLOGY | Cardinal Health vs. SCOTT TECHNOLOGY | Cardinal Health vs. Easy Software AG | Cardinal Health vs. GRIFFIN MINING LTD |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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