Correlation Between Uber Technologies and Cardinal Health

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

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

Diversification Opportunities for Uber Technologies and Cardinal Health

-0.56

Correlation Coefficient

Uber Technologies  Cardinal Health

Excellent diversification

The 3 months correlation between Uber and Cardinal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Cardinal Health go up and down completely randomly.

Pair Corralation between Uber Technologies and Cardinal Health

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Cardinal Health. In addition to that, Uber Technologies is 2.31 times more volatile than Cardinal Health. It trades about -0.22 of its total potential returns per unit of risk. Cardinal Health is currently generating about -0.11 per unit of volatility. If you would invest  12,003  in Cardinal Health on September 19, 2024 and sell it today you would lose (348.00) from holding Cardinal Health or give up 2.9% of portfolio value over 90 days.

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

Uber Technologies  vs.  Cardinal Health

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Cardinal Health

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Uber Technologies and Cardinal Health

The main advantage of trading using opposite Uber Technologies and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.