Correlation Between Cardinal Health and Vestis

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

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

Diversification Opportunities for Cardinal Health and Vestis

-0.54

Correlation Coefficient

Cardinal Health  Vestis

Excellent diversification

The 3 months correlation between Cardinal and Vestis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Cardinal Health i.e., Cardinal Health and Vestis go up and down completely randomly.

Pair Corralation between Cardinal Health and Vestis

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.47 times more return on investment than Vestis. However, Cardinal Health is 2.14 times less risky than Vestis. It trades about 0.18 of its potential returns per unit of risk. Vestis is currently generating about -0.31 per unit of risk. If you would invest  11,777  in Cardinal Health on December 20, 2024 and sell it today you would earn a total of  1,435  from holding Cardinal Health or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Health  vs.  Vestis

Cardinal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 14 (%) 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 April 2025.

Vestis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cardinal Health and Vestis

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

The idea behind Cardinal Health and Vestis 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.