Correlation Between Cardinal Health, and Guidewire Software,

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

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

Diversification Opportunities for Cardinal Health, and Guidewire Software,

0.39

Correlation Coefficient

Cardinal Health,  Guidewire Software,

Weak diversification

The 3 months correlation between Cardinal and Guidewire is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health, and Guidewire Software, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software, 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 Guidewire Software,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software, has no effect on the direction of Cardinal Health, i.e., Cardinal Health, and Guidewire Software, go up and down completely randomly.

Pair Corralation between Cardinal Health, and Guidewire Software,

Assuming the 90 days trading horizon Cardinal Health, is expected to generate 0.75 times more return on investment than Guidewire Software,. However, Cardinal Health, is 1.34 times less risky than Guidewire Software,. It trades about 0.2 of its potential returns per unit of risk. Guidewire Software, is currently generating about 0.03 per unit of risk. If you would invest  60,010  in Cardinal Health, on October 8, 2024 and sell it today you would earn a total of  12,852  from holding Cardinal Health, or generate 21.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.61%
Values	Daily Returns

Cardinal Health,  vs.  Guidewire Software,

Cardinal Health,

Risk-Adjusted Performance

16 of 100

Good

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. Despite somewhat weak basic indicators, Cardinal Health, sustained solid returns over the last few months and may actually be approaching a breakup point.

Guidewire Software,

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Guidewire Software, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guidewire Software, is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardinal Health, and Guidewire Software,

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

The idea behind Cardinal Health, and Guidewire Software, 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.