Correlation Between CARDINAL HEALTH and DFS Furniture

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

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

Diversification Opportunities for CARDINAL HEALTH and DFS Furniture

0.1

Correlation Coefficient

CARDINAL HEALTH  DFS Furniture

Average diversification

The 3 months correlation between CARDINAL and DFS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and DFS Furniture go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and DFS Furniture

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.67 times more return on investment than DFS Furniture. However, CARDINAL HEALTH is 1.49 times less risky than DFS Furniture. It trades about 0.2 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.02 per unit of risk. If you would invest  10,284  in CARDINAL HEALTH on October 26, 2024 and sell it today you would earn a total of  2,046  from holding CARDINAL HEALTH or generate 19.89% 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.  DFS Furniture PLC

CARDINAL HEALTH

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

DFS Furniture PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DFS Furniture PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DFS Furniture is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CARDINAL HEALTH and DFS Furniture

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

The idea behind CARDINAL HEALTH and DFS Furniture 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..