Correlation Between CARDINAL HEALTH and CONAGRA FOODS

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

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

Diversification Opportunities for CARDINAL HEALTH and CONAGRA FOODS

-0.59

Correlation Coefficient

CARDINAL HEALTH  CONAGRA FOODS

Excellent diversification

The 3 months correlation between CARDINAL and CONAGRA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS 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 CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and CONAGRA FOODS go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and CONAGRA FOODS

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.73 times more return on investment than CONAGRA FOODS. However, CARDINAL HEALTH is 1.36 times less risky than CONAGRA FOODS. It trades about -0.03 of its potential returns per unit of risk. CONAGRA FOODS is currently generating about -0.07 per unit of risk. If you would invest  11,608  in CARDINAL HEALTH on October 10, 2024 and sell it today you would lose (73.00) from holding CARDINAL HEALTH or give up 0.63% of portfolio value over 90 days.

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

CARDINAL HEALTH  vs.  CONAGRA FOODS

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. In spite of comparatively unsteady technical indicators, CARDINAL HEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CONAGRA FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CONAGRA FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CARDINAL HEALTH and CONAGRA FOODS

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

The idea behind CARDINAL HEALTH and CONAGRA FOODS 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.