Correlation Between AstraZeneca PLC and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC 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 AstraZeneca PLC and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and Cardinal Health, you can compare the effects of market volatilities on AstraZeneca PLC 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 AstraZeneca PLC with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Cardinal Health.
Diversification Opportunities for AstraZeneca PLC and Cardinal Health
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AstraZeneca and Cardinal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and AstraZeneca PLC 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 AstraZeneca 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 AstraZeneca PLC i.e., AstraZeneca PLC and Cardinal Health go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Cardinal Health
Assuming the 90 days horizon AstraZeneca PLC is expected to generate 3.6 times less return on investment than Cardinal Health. But when comparing it to its historical volatility, AstraZeneca PLC is 1.41 times less risky than Cardinal Health. It trades about 0.11 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 11,275 in Cardinal Health on October 24, 2024 and sell it today you would earn a total of 890.00 from holding Cardinal Health or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC vs. Cardinal Health
Performance |
| Timeline |
| AstraZeneca PLC |
| Cardinal Health |
AstraZeneca PLC and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Cardinal Health
The main advantage of trading using opposite AstraZeneca PLC and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC 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.The idea behind AstraZeneca PLC and Cardinal Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cardinal Health vs. STEEL DYNAMICS | Cardinal Health vs. ANGANG STEEL H | Cardinal Health vs. KOBE STEEL LTD | Cardinal Health vs. PULSION Medical Systems |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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