Correlation Between Applied Digital and CARDINAL

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

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

Diversification Opportunities for Applied Digital and CARDINAL

0.19

Correlation Coefficient

Applied Digital  CARDINAL

Average diversification

The 3 months correlation between Applied and CARDINAL is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and CARDINAL HEALTH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH INC and Applied Digital 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 Applied Digital are associated (or correlated) with CARDINAL. 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 INC has no effect on the direction of Applied Digital i.e., Applied Digital and CARDINAL go up and down completely randomly.

Pair Corralation between Applied Digital and CARDINAL

Given the investment horizon of 90 days Applied Digital is expected to under-perform the CARDINAL. In addition to that, Applied Digital is 9.08 times more volatile than CARDINAL HEALTH INC. It trades about 0.0 of its total potential returns per unit of risk. CARDINAL HEALTH INC is currently generating about 0.14 per unit of volatility. If you would invest  8,449  in CARDINAL HEALTH INC on December 26, 2024 and sell it today you would earn a total of  407.00  from holding CARDINAL HEALTH INC or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Applied Digital  vs.  CARDINAL HEALTH INC

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Applied Digital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CARDINAL HEALTH INC

Risk-Adjusted Performance

OK

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

Pair Trading with Applied Digital and CARDINAL

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

The idea behind Applied Digital and CARDINAL HEALTH INC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.