Correlation Between CARDINAL HEALTH and Webster Financial
Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and Webster Financial 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 Webster Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARDINAL HEALTH and Webster Financial, you can compare the effects of market volatilities on CARDINAL HEALTH and Webster Financial 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 Webster Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Webster Financial.
Diversification Opportunities for CARDINAL HEALTH and Webster Financial
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CARDINAL and Webster is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Webster Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Webster Financial 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 Webster Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Webster Financial has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Webster Financial go up and down completely randomly.
Pair Corralation between CARDINAL HEALTH and Webster Financial
Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.55 times more return on investment than Webster Financial. However, CARDINAL HEALTH is 1.82 times less risky than Webster Financial. It trades about 0.07 of its potential returns per unit of risk. Webster Financial is currently generating about 0.01 per unit of risk. If you would invest 11,688 in CARDINAL HEALTH on November 22, 2024 and sell it today you would earn a total of 397.00 from holding CARDINAL HEALTH or generate 3.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CARDINAL HEALTH vs. Webster Financial
Performance |
Timeline |
CARDINAL HEALTH |
Webster Financial |
CARDINAL HEALTH and Webster Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CARDINAL HEALTH and Webster Financial
The main advantage of trading using opposite CARDINAL HEALTH and Webster Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARDINAL HEALTH position performs unexpectedly, Webster Financial 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 Webster Financial will offset losses from the drop in Webster Financial's long position.CARDINAL HEALTH vs. Wyndham Hotels Resorts | ||
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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