Correlation Between Treasury Wine and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Treasury Wine 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 Treasury Wine and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treasury Wine Estates and Cardinal Health, you can compare the effects of market volatilities on Treasury Wine 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 Treasury Wine with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Cardinal Health.
Diversification Opportunities for Treasury Wine and Cardinal Health
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Treasury and Cardinal is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Treasury Wine 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 Treasury Wine Estates 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 Treasury Wine i.e., Treasury Wine and Cardinal Health go up and down completely randomly.
Pair Corralation between Treasury Wine and Cardinal Health
Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Cardinal Health. In addition to that, Treasury Wine is 2.72 times more volatile than Cardinal Health. It trades about -0.01 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 8,164 in Cardinal Health on August 30, 2024 and sell it today you would earn a total of 4,099 from holding Cardinal Health or generate 50.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 70.81% |
| Values | Daily Returns |
Treasury Wine Estates vs. Cardinal Health
Performance |
| Timeline |
| Treasury Wine Estates |
| Cardinal Health |
Treasury Wine and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Cardinal Health
The main advantage of trading using opposite Treasury Wine and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine 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.| Treasury Wine vs. Aristocrat Group Corp | Treasury Wine vs. Naked Wines plc | Treasury Wine vs. Willamette Valley Vineyards | Treasury Wine vs. Andrew Peller Limited |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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