Correlation Between Cardinal Health and Barrick Gold

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

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

Diversification Opportunities for Cardinal Health and Barrick Gold

0.57

Correlation Coefficient

Cardinal Health  Barrick Gold

Very weak diversification

The 3 months correlation between Cardinal and Barrick is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold Corp 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of Cardinal Health i.e., Cardinal Health and Barrick Gold go up and down completely randomly.

Pair Corralation between Cardinal Health and Barrick Gold

Considering the 90-day investment horizon Cardinal Health is expected to generate 1.82 times less return on investment than Barrick Gold. But when comparing it to its historical volatility, Cardinal Health is 1.64 times less risky than Barrick Gold. It trades about 0.19 of its potential returns per unit of risk. Barrick Gold Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Barrick Gold Corp on December 21, 2024 and sell it today you would earn a total of  378.00  from holding Barrick Gold Corp or generate 24.39% 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.  Barrick Gold Corp

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.

Barrick Gold Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Barrick Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardinal Health and Barrick Gold

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

The idea behind Cardinal Health and Barrick Gold Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.