Correlation Between CARDINAL HEALTH and Air Lease

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

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

Diversification Opportunities for CARDINAL HEALTH and Air Lease

-0.15

Correlation Coefficient

CARDINAL HEALTH  Air Lease

Good diversification

The 3 months correlation between CARDINAL and Air is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Air Lease go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and Air Lease

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.51 times more return on investment than Air Lease. However, CARDINAL HEALTH is 1.97 times less risky than Air Lease. It trades about 0.15 of its potential returns per unit of risk. Air Lease is currently generating about -0.05 per unit of risk. If you would invest  11,280  in CARDINAL HEALTH on December 22, 2024 and sell it today you would earn a total of  955.00  from holding CARDINAL HEALTH or generate 8.47% return on investment over 90 days.

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

CARDINAL HEALTH  vs.  Air Lease

CARDINAL HEALTH

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical indicators, CARDINAL HEALTH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Air Lease 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 Air Lease

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

The idea behind CARDINAL HEALTH and Air Lease 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.