Correlation Between Patterson Companies and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Patterson Companies 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 Patterson Companies and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patterson Companies and Cardinal Health, you can compare the effects of market volatilities on Patterson Companies 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 Patterson Companies with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patterson Companies and Cardinal Health.
Diversification Opportunities for Patterson Companies and Cardinal Health
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Patterson and Cardinal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Patterson Companies and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Patterson Companies 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 Patterson Companies 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 Patterson Companies i.e., Patterson Companies and Cardinal Health go up and down completely randomly.
Pair Corralation between Patterson Companies and Cardinal Health
Assuming the 90 days horizon Patterson Companies is expected to generate 1.27 times less return on investment than Cardinal Health. In addition to that, Patterson Companies is 1.19 times more volatile than Cardinal Health. It trades about 0.11 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.17 per unit of volatility. If you would invest 10,730 in Cardinal Health on September 3, 2024 and sell it today you would earn a total of 840.00 from holding Cardinal Health or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Patterson Companies vs. Cardinal Health
Performance |
| Timeline |
| Patterson Companies |
| Cardinal Health |
Patterson Companies and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patterson Companies and Cardinal Health
The main advantage of trading using opposite Patterson Companies and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson Companies 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.| Patterson Companies vs. AmerisourceBergen | Patterson Companies vs. Superior Plus Corp | Patterson Companies vs. NMI Holdings | Patterson Companies vs. Origin Agritech |
| Cardinal Health vs. AmerisourceBergen | Cardinal Health vs. Superior Plus Corp | Cardinal Health vs. NMI Holdings | Cardinal Health vs. Origin Agritech |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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