Correlation Between Cardinal Health and WIZZ AIR

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

By analyzing existing cross correlation between Cardinal Health and WIZZ AIR HLDGUNSPADR4, you can compare the effects of market volatilities on Cardinal Health and WIZZ AIR 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 WIZZ AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and WIZZ AIR.

Diversification Opportunities for Cardinal Health and WIZZ AIR

0.03

Correlation Coefficient

Cardinal Health  WIZZ AIR

Significant diversification

The 3 months correlation between Cardinal and WIZZ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and WIZZ AIR HLDGUNSPADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIZZ AIR HLDGUNSPADR4 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 WIZZ AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIZZ AIR HLDGUNSPADR4 has no effect on the direction of Cardinal Health i.e., Cardinal Health and WIZZ AIR go up and down completely randomly.

Pair Corralation between Cardinal Health and WIZZ AIR

Assuming the 90 days horizon Cardinal Health is expected to generate 0.46 times more return on investment than WIZZ AIR. However, Cardinal Health is 2.19 times less risky than WIZZ AIR. It trades about 0.15 of its potential returns per unit of risk. WIZZ AIR HLDGUNSPADR4 is currently generating about 0.02 per unit of risk. If you would invest  10,299  in Cardinal Health on October 23, 2024 and sell it today you would earn a total of  1,936  from holding Cardinal Health or generate 18.8% return on investment over 90 days.

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

Cardinal Health  vs.  WIZZ AIR HLDGUNSPADR4

Cardinal Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

WIZZ AIR HLDGUNSPADR4

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIZZ AIR HLDGUNSPADR4 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WIZZ AIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardinal Health and WIZZ AIR

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

The idea behind Cardinal Health and WIZZ AIR HLDGUNSPADR4 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 Stocks Directory module to find actively traded stocks across global markets.