Correlation Between Cardinal Health, and T Mobile

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

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

Diversification Opportunities for Cardinal Health, and T Mobile

0.23

Correlation Coefficient

Cardinal Health,  T Mobile

Modest diversification

The 3 months correlation between Cardinal and T1MU34 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health, and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Cardinal Health, i.e., Cardinal Health, and T Mobile go up and down completely randomly.

Pair Corralation between Cardinal Health, and T Mobile

Assuming the 90 days trading horizon Cardinal Health, is expected to generate 0.73 times more return on investment than T Mobile. However, Cardinal Health, is 1.37 times less risky than T Mobile. It trades about 0.15 of its potential returns per unit of risk. T Mobile is currently generating about 0.06 per unit of risk. If you would invest  63,682  in Cardinal Health, on December 25, 2024 and sell it today you would earn a total of  9,118  from holding Cardinal Health, or generate 14.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Cardinal Health,  vs.  T Mobile

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

T Mobile

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Cardinal Health, and T Mobile

The main advantage of trading using opposite Cardinal Health, and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health, position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind Cardinal Health, and T Mobile 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.