Correlation Between Brockhaus Capital and Cardinal Health

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

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

Diversification Opportunities for Brockhaus Capital and Cardinal Health

-0.78

Correlation Coefficient

Brockhaus Capital  Cardinal Health

Pay attention - limited upside

The 3 months correlation between Brockhaus and Cardinal is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Brockhaus Capital Management and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Brockhaus Capital 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 Brockhaus Capital Management 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 Brockhaus Capital i.e., Brockhaus Capital and Cardinal Health go up and down completely randomly.

Pair Corralation between Brockhaus Capital and Cardinal Health

Assuming the 90 days trading horizon Brockhaus Capital Management is expected to under-perform the Cardinal Health. But the stock apears to be less risky and, when comparing its historical volatility, Brockhaus Capital Management is 1.02 times less risky than Cardinal Health. The stock trades about -0.23 of its potential returns per unit of risk. The Cardinal Health is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  10,730  in Cardinal Health on September 4, 2024 and sell it today you would earn a total of  840.00  from holding Cardinal Health or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Brockhaus Capital Management  vs.  Cardinal Health

Brockhaus Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brockhaus Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cardinal Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brockhaus Capital and Cardinal Health

The main advantage of trading using opposite Brockhaus Capital and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brockhaus Capital 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 Brockhaus Capital Management 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.