Correlation Between Cardinal Health and PACIFIC

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

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

Diversification Opportunities for Cardinal Health and PACIFIC

0.2

Correlation Coefficient

Cardinal Health  PACIFIC

Modest diversification

The 3 months correlation between Cardinal and PACIFIC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and PACIFIC GAS ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS ELECTRIC 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS ELECTRIC has no effect on the direction of Cardinal Health i.e., Cardinal Health and PACIFIC go up and down completely randomly.

Pair Corralation between Cardinal Health and PACIFIC

Considering the 90-day investment horizon Cardinal Health is expected to generate 19.06 times less return on investment than PACIFIC. But when comparing it to its historical volatility, Cardinal Health is 34.81 times less risky than PACIFIC. It trades about 0.08 of its potential returns per unit of risk. PACIFIC GAS ELECTRIC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,421  in PACIFIC GAS ELECTRIC on October 5, 2024 and sell it today you would earn a total of  511.00  from holding PACIFIC GAS ELECTRIC or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.16%
Values	Daily Returns

Cardinal Health  vs.  PACIFIC GAS ELECTRIC

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 unsteady basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS ELECTRIC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardinal Health and PACIFIC

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

The idea behind Cardinal Health and PACIFIC GAS ELECTRIC 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 CEOs Directory module to screen CEOs from public companies around the world.