Correlation Between Cardinal Health and National Waste

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

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

Diversification Opportunities for Cardinal Health and National Waste

0.0

Correlation Coefficient

Cardinal Health  National Waste

Pay attention - limited upside

The 3 months correlation between Cardinal and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and National Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Waste Management 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 National Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Waste Management has no effect on the direction of Cardinal Health i.e., Cardinal Health and National Waste go up and down completely randomly.

Pair Corralation between Cardinal Health and National Waste

If you would invest  7,549  in Cardinal Health on October 25, 2024 and sell it today you would earn a total of  5,381  from holding Cardinal Health or generate 71.28% return on investment over 90 days.

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

Cardinal Health  vs.  National Waste Management

Cardinal Health

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 13 (%) 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.

National Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National Waste is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cardinal Health and National Waste

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

The idea behind Cardinal Health and National Waste Management 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.