Correlation Between CARDINAL HEALTH and Salesforce

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

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

Diversification Opportunities for CARDINAL HEALTH and Salesforce

-0.01

Correlation Coefficient

CARDINAL HEALTH  Salesforce

Good diversification

The 3 months correlation between CARDINAL and Salesforce is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Salesforce go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and Salesforce

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.49 times more return on investment than Salesforce. However, CARDINAL HEALTH is 2.05 times less risky than Salesforce. It trades about 0.14 of its potential returns per unit of risk. Salesforce is currently generating about -0.15 per unit of risk. If you would invest  11,359  in CARDINAL HEALTH on December 26, 2024 and sell it today you would earn a total of  926.00  from holding CARDINAL HEALTH or generate 8.15% 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.  Salesforce

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 fragile technical indicators, CARDINAL HEALTH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CARDINAL HEALTH and Salesforce

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

The idea behind CARDINAL HEALTH and Salesforce 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.