Correlation Between Cardinal Health and Clarkson PLC

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

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

Diversification Opportunities for Cardinal Health and Clarkson PLC

0.57

Correlation Coefficient

Cardinal Health  Clarkson PLC

Very weak diversification

The 3 months correlation between Cardinal and Clarkson is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Clarkson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkson PLC 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 Clarkson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkson PLC has no effect on the direction of Cardinal Health i.e., Cardinal Health and Clarkson PLC go up and down completely randomly.

Pair Corralation between Cardinal Health and Clarkson PLC

Assuming the 90 days horizon Cardinal Health is expected to generate 1.03 times more return on investment than Clarkson PLC. However, Cardinal Health is 1.03 times more volatile than Clarkson PLC. It trades about 0.11 of its potential returns per unit of risk. Clarkson PLC is currently generating about 0.09 per unit of risk. If you would invest  10,277  in Cardinal Health on September 4, 2024 and sell it today you would earn a total of  1,293  from holding Cardinal Health or generate 12.58% return on investment over 90 days.

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

Cardinal Health  vs.  Clarkson PLC

Cardinal Health

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clarkson PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clarkson PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Clarkson PLC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cardinal Health and Clarkson PLC

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

The idea behind Cardinal Health and Clarkson PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..