Correlation Between Premier Foods and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Premier Foods 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 Premier Foods and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Foods PLC and Cardinal Health, you can compare the effects of market volatilities on Premier Foods 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 Premier Foods with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Foods and Cardinal Health.
Diversification Opportunities for Premier Foods and Cardinal Health
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Premier and Cardinal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Premier Foods PLC and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Premier Foods 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 Premier Foods PLC 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 Premier Foods i.e., Premier Foods and Cardinal Health go up and down completely randomly.
Pair Corralation between Premier Foods and Cardinal Health
Assuming the 90 days trading horizon Premier Foods PLC is expected to generate 0.85 times more return on investment than Cardinal Health. However, Premier Foods PLC is 1.18 times less risky than Cardinal Health. It trades about 0.19 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.08 per unit of risk. If you would invest 18,260 in Premier Foods PLC on September 21, 2024 and sell it today you would earn a total of 800.00 from holding Premier Foods PLC or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Foods PLC vs. Cardinal Health
Performance |
| Timeline |
| Premier Foods PLC |
| Cardinal Health |
Premier Foods and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Foods and Cardinal Health
The main advantage of trading using opposite Premier Foods and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Foods 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.| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor Corp |
| Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Samsung Electronics Co | Cardinal Health vs. Hyundai Motor | Cardinal Health vs. Reliance Industries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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