Correlation Between Cardinal Health and Delek Energy

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

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

Diversification Opportunities for Cardinal Health and Delek Energy

-0.02

Correlation Coefficient

Cardinal Health  Delek Energy

Good diversification

The 3 months correlation between Cardinal and Delek is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Delek Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Energy 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 Delek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Energy has no effect on the direction of Cardinal Health i.e., Cardinal Health and Delek Energy go up and down completely randomly.

Pair Corralation between Cardinal Health and Delek Energy

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.35 times more return on investment than Delek Energy. However, Cardinal Health is 2.9 times less risky than Delek Energy. It trades about 0.19 of its potential returns per unit of risk. Delek Energy is currently generating about 0.03 per unit of risk. If you would invest  11,650  in Cardinal Health on December 19, 2024 and sell it today you would earn a total of  1,496  from holding Cardinal Health or generate 12.84% return on investment over 90 days.

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

Cardinal Health  vs.  Delek Energy

Cardinal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Cardinal Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Delek Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Delek Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cardinal Health and Delek Energy

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

The idea behind Cardinal Health and Delek Energy 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.