Correlation Between Cardinal Health and TOYOTA

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

By analyzing existing cross correlation between Cardinal Health and TOYOTA 5067497 10 JAN 25, you can compare the effects of market volatilities on Cardinal Health and TOYOTA 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 TOYOTA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and TOYOTA.

Diversification Opportunities for Cardinal Health and TOYOTA

-0.49

Correlation Coefficient

Cardinal Health  TOYOTA

Very good diversification

The 3 months correlation between Cardinal and TOYOTA is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and TOYOTA 5067497 10 JAN 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOYOTA 5067497 10 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 TOYOTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOYOTA 5067497 10 has no effect on the direction of Cardinal Health i.e., Cardinal Health and TOYOTA go up and down completely randomly.

Pair Corralation between Cardinal Health and TOYOTA

Considering the 90-day investment horizon Cardinal Health is expected to generate 9.37 times more return on investment than TOYOTA. However, Cardinal Health is 9.37 times more volatile than TOYOTA 5067497 10 JAN 25. It trades about 0.12 of its potential returns per unit of risk. TOYOTA 5067497 10 JAN 25 is currently generating about -0.01 per unit of risk. If you would invest  11,126  in Cardinal Health on September 5, 2024 and sell it today you would earn a total of  1,201  from holding Cardinal Health or generate 10.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Cardinal Health  vs.  TOYOTA 5067497 10 JAN 25

Cardinal Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TOYOTA 5067497 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOYOTA 5067497 10 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TOYOTA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardinal Health and TOYOTA

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

The idea behind Cardinal Health and TOYOTA 5067497 10 JAN 25 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.