Correlation Between Bellring Brands and Cardinal Health

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

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

Diversification Opportunities for Bellring Brands and Cardinal Health

0.07

Correlation Coefficient

Bellring Brands  Cardinal Health

Significant diversification

The 3 months correlation between Bellring and Cardinal is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bellring Brands LLC and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Bellring Brands 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 Bellring Brands LLC 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 Bellring Brands i.e., Bellring Brands and Cardinal Health go up and down completely randomly.

Pair Corralation between Bellring Brands and Cardinal Health

Given the investment horizon of 90 days Bellring Brands LLC is expected to under-perform the Cardinal Health. In addition to that, Bellring Brands is 1.53 times more volatile than Cardinal Health. It trades about -0.08 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of volatility. If you would invest  12,172  in Cardinal Health on November 28, 2024 and sell it today you would earn a total of  583.00  from holding Cardinal Health or generate 4.79% return on investment over 90 days.

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

Bellring Brands LLC  vs.  Cardinal Health

Bellring Brands LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellring Brands LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Cardinal Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bellring Brands and Cardinal Health

The main advantage of trading using opposite Bellring Brands and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bellring Brands 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 Bellring Brands LLC 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.