Correlation Between CARDINAL HEALTH and CAREER EDUCATION

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

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

Diversification Opportunities for CARDINAL HEALTH and CAREER EDUCATION

0.32

Correlation Coefficient

CARDINAL HEALTH  CAREER EDUCATION

Weak diversification

The 3 months correlation between CARDINAL and CAREER is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and CAREER EDUCATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAREER EDUCATION 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 CAREER EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAREER EDUCATION has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and CAREER EDUCATION go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and CAREER EDUCATION

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.57 times more return on investment than CAREER EDUCATION. However, CARDINAL HEALTH is 1.74 times less risky than CAREER EDUCATION. It trades about 0.13 of its potential returns per unit of risk. CAREER EDUCATION is currently generating about -0.1 per unit of risk. If you would invest  11,359  in CARDINAL HEALTH on December 25, 2024 and sell it today you would earn a total of  866.00  from holding CARDINAL HEALTH or generate 7.62% return on investment over 90 days.

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

CARDINAL HEALTH  vs.  CAREER EDUCATION

CARDINAL HEALTH

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 10 (%) 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.

CAREER EDUCATION

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAREER EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CARDINAL HEALTH and CAREER EDUCATION

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

The idea behind CARDINAL HEALTH and CAREER EDUCATION 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.