Correlation Between Cardinal Health and Iron Mountain

Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Iron Mountain 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 Cardinal Health and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Health and Iron Mountain, you can compare the effects of market volatilities on Cardinal Health and Iron Mountain 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 Cardinal Health with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Iron Mountain.

Diversification Opportunities for Cardinal Health and Iron Mountain

-0.44

Correlation Coefficient

Cardinal Health  Iron Mountain

Very good diversification

The 3 months correlation between Cardinal and Iron is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Iron Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Cardinal 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 Cardinal Health are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Cardinal Health i.e., Cardinal Health and Iron Mountain go up and down completely randomly.

Pair Corralation between Cardinal Health and Iron Mountain

Assuming the 90 days trading horizon Cardinal Health is expected to generate 0.49 times more return on investment than Iron Mountain. However, Cardinal Health is 2.03 times less risky than Iron Mountain. It trades about 0.22 of its potential returns per unit of risk. Iron Mountain is currently generating about -0.11 per unit of risk. If you would invest  11,767  in Cardinal Health on December 29, 2024 and sell it today you would earn a total of  1,918  from holding Cardinal Health or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Health  vs.  Iron Mountain

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cardinal Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Iron Mountain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cardinal Health and Iron Mountain

The main advantage of trading using opposite Cardinal Health and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.

The idea behind Cardinal Health and Iron Mountain 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.