Correlation Between Stagwell and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Cardinal Health, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Cardinal Health.
Diversification Opportunities for Stagwell and Cardinal Health
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stagwell and Cardinal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and Cardinal Health go up and down completely randomly.
Pair Corralation between Stagwell and Cardinal Health
Given the investment horizon of 90 days Stagwell is expected to generate 1.03 times less return on investment than Cardinal Health. In addition to that, Stagwell is 2.63 times more volatile than Cardinal Health. It trades about 0.03 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 7,421 in Cardinal Health on August 26, 2024 and sell it today you would earn a total of 4,763 from holding Cardinal Health or generate 64.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Cardinal Health
Performance |
| Timeline |
| Stagwell |
| Cardinal Health |
Stagwell and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Cardinal Health
The main advantage of trading using opposite Stagwell and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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.| Stagwell vs. Innovid Corp | Stagwell vs. Interpublic Group of | Stagwell vs. Cimpress NV | Stagwell vs. Criteo Sa |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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