Correlation Between OPKO HEALTH and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both OPKO HEALTH 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 OPKO HEALTH and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPKO HEALTH and Cardinal Health, you can compare the effects of market volatilities on OPKO HEALTH 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 OPKO HEALTH with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPKO HEALTH and Cardinal Health.
Diversification Opportunities for OPKO HEALTH and Cardinal Health
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OPKO and Cardinal is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding OPKO HEALTH and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and OPKO HEALTH 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 OPKO HEALTH 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 OPKO HEALTH i.e., OPKO HEALTH and Cardinal Health go up and down completely randomly.
Pair Corralation between OPKO HEALTH and Cardinal Health
Assuming the 90 days trading horizon OPKO HEALTH is expected to generate 2.87 times less return on investment than Cardinal Health. In addition to that, OPKO HEALTH is 1.88 times more volatile than Cardinal Health. It trades about 0.02 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 6,623 in Cardinal Health on October 13, 2024 and sell it today you would earn a total of 5,207 from holding Cardinal Health or generate 78.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPKO HEALTH vs. Cardinal Health
Performance |
| Timeline |
| OPKO HEALTH |
| Cardinal Health |
OPKO HEALTH and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPKO HEALTH and Cardinal Health
The main advantage of trading using opposite OPKO HEALTH and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPKO HEALTH 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.| OPKO HEALTH vs. Apple Inc | OPKO HEALTH vs. Apple Inc | OPKO HEALTH vs. Apple Inc | OPKO HEALTH vs. Apple Inc |
| Cardinal Health vs. NIGHTINGALE HEALTH EO | Cardinal Health vs. URBAN OUTFITTERS | Cardinal Health vs. United Airlines Holdings | Cardinal Health vs. OPKO HEALTH |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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