Correlation Between US Global and Cardinal Health

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

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

Diversification Opportunities for US Global and Cardinal Health

0.12

Correlation Coefficient

US Global  Cardinal Health

Average diversification

The 3 months correlation between GROW and Cardinal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and US Global 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 US Global Investors 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 US Global i.e., US Global and Cardinal Health go up and down completely randomly.

Pair Corralation between US Global and Cardinal Health

Given the investment horizon of 90 days US Global Investors is expected to under-perform the Cardinal Health. In addition to that, US Global is 1.12 times more volatile than Cardinal Health. It trades about 0.0 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  8,171  in Cardinal Health on October 24, 2024 and sell it today you would earn a total of  4,704  from holding Cardinal Health or generate 57.57% return on investment over 90 days.

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

US Global Investors  vs.  Cardinal Health

US Global Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cardinal Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Cardinal Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with US Global and Cardinal Health

The main advantage of trading using opposite US Global and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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 US Global Investors 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.