Correlation Between United Insurance and CARDINAL HEALTH

Can any of the company-specific risk be diversified away by investing in both United Insurance 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 United Insurance and CARDINAL HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Insurance Holdings and CARDINAL HEALTH, you can compare the effects of market volatilities on United Insurance 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 United Insurance with a short position of CARDINAL HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Insurance and CARDINAL HEALTH.

Diversification Opportunities for United Insurance and CARDINAL HEALTH

-0.36

Correlation Coefficient

United Insurance  CARDINAL HEALTH

Very good diversification

The 3 months correlation between United and CARDINAL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and United Insurance 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 United Insurance Holdings 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 United Insurance i.e., United Insurance and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between United Insurance and CARDINAL HEALTH

Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the CARDINAL HEALTH. In addition to that, United Insurance is 2.28 times more volatile than CARDINAL HEALTH. It trades about -0.05 of its total potential returns per unit of risk. CARDINAL HEALTH is currently generating about 0.15 per unit of volatility. If you would invest  11,280  in CARDINAL HEALTH on December 22, 2024 and sell it today you would earn a total of  955.00  from holding CARDINAL HEALTH or generate 8.47% return on investment over 90 days.

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

United Insurance Holdings  vs.  CARDINAL HEALTH

United Insurance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CARDINAL HEALTH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, CARDINAL HEALTH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with United Insurance and CARDINAL HEALTH

The main advantage of trading using opposite United Insurance and CARDINAL HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Insurance 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 United Insurance Holdings 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.