Correlation Between Cardinal Health and Joint Corp

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

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

Diversification Opportunities for Cardinal Health and Joint Corp

0.35

Correlation Coefficient

Cardinal Health  Joint Corp

Weak diversification

The 3 months correlation between Cardinal and Joint is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint 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 Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of Cardinal Health i.e., Cardinal Health and Joint Corp go up and down completely randomly.

Pair Corralation between Cardinal Health and Joint Corp

Considering the 90-day investment horizon Cardinal Health is expected to under-perform the Joint Corp. But the stock apears to be less risky and, when comparing its historical volatility, Cardinal Health is 1.44 times less risky than Joint Corp. The stock trades about -0.11 of its potential returns per unit of risk. The The Joint Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,080  in The Joint Corp on September 19, 2024 and sell it today you would earn a total of  17.00  from holding The Joint Corp or generate 1.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Cardinal Health  vs.  The Joint Corp

Cardinal Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Joint Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Joint Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Joint Corp is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardinal Health and Joint Corp

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

The idea behind Cardinal Health and The Joint 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.