Correlation Between Cardinal Health and Barings BDC
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Barings BDC 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 Barings BDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Barings BDC, you can compare the effects of market volatilities on Cardinal Health and Barings BDC 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 Barings BDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Barings BDC.
Diversification Opportunities for Cardinal Health and Barings BDC
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cardinal and Barings is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Barings BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings BDC 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 Barings BDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings BDC has no effect on the direction of Cardinal Health i.e., Cardinal Health and Barings BDC go up and down completely randomly.
Pair Corralation between Cardinal Health and Barings BDC
Considering the 90-day investment horizon Cardinal Health is expected to generate 1.5 times more return on investment than Barings BDC. However, Cardinal Health is 1.5 times more volatile than Barings BDC. It trades about 0.08 of its potential returns per unit of risk. Barings BDC is currently generating about -0.03 per unit of risk. If you would invest 10,969 in Cardinal Health on September 24, 2024 and sell it today you would earn a total of 866.00 from holding Cardinal Health or generate 7.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cardinal Health vs. Barings BDC
Performance |
Timeline |
Cardinal Health |
Barings BDC |
Cardinal Health and Barings BDC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cardinal Health and Barings BDC
The main advantage of trading using opposite Cardinal Health and Barings BDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Barings BDC 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 Barings BDC will offset losses from the drop in Barings BDC's long position.Cardinal Health vs. Cigna Corp | Cardinal Health vs. Definitive Healthcare Corp | Cardinal Health vs. Edwards Lifesciences Corp | Cardinal Health vs. Outset Medical |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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