Correlation Between Catalyst Media and Cardinal Health

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

By analyzing existing cross correlation between Catalyst Media Group and Cardinal Health, you can compare the effects of market volatilities on Catalyst Media and Cardinal Health 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 Catalyst Media with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Media and Cardinal Health.

Diversification Opportunities for Catalyst Media and Cardinal Health

0.36

Correlation Coefficient

Catalyst Media  Cardinal Health

Weak diversification

The 3 months correlation between Catalyst and Cardinal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Media Group and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Catalyst Media 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 Catalyst Media Group are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Catalyst Media i.e., Catalyst Media and Cardinal Health go up and down completely randomly.

Pair Corralation between Catalyst Media and Cardinal Health

Assuming the 90 days trading horizon Catalyst Media is expected to generate 2.06 times less return on investment than Cardinal Health. In addition to that, Catalyst Media is 1.22 times more volatile than Cardinal Health. It trades about 0.03 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.09 per unit of volatility. If you would invest  11,210  in Cardinal Health on September 12, 2024 and sell it today you would earn a total of  859.00  from holding Cardinal Health or generate 7.66% return on investment over 90 days.

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

Catalyst Media Group  vs.  Cardinal Health

Catalyst Media Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Catalyst Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cardinal Health

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Catalyst Media and Cardinal Health

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

The idea behind Catalyst Media Group and Cardinal Health 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.