Correlation Between 126408GX5 and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both 126408GX5 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 126408GX5 and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSX P 44 and Cardinal Health, you can compare the effects of market volatilities on 126408GX5 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 126408GX5 with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 126408GX5 and Cardinal Health.

Diversification Opportunities for 126408GX5 and Cardinal Health

0.36

Correlation Coefficient

126408GX5  Cardinal Health

Weak diversification

The 3 months correlation between 126408GX5 and Cardinal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CSX P 44 and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and 126408GX5 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 CSX P 44 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 126408GX5 i.e., 126408GX5 and Cardinal Health go up and down completely randomly.

Pair Corralation between 126408GX5 and Cardinal Health

Assuming the 90 days trading horizon CSX P 44 is expected to generate 2.21 times more return on investment than Cardinal Health. However, 126408GX5 is 2.21 times more volatile than Cardinal Health. It trades about 0.11 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of risk. If you would invest  9,096  in CSX P 44 on October 10, 2024 and sell it today you would earn a total of  620.00  from holding CSX P 44 or generate 6.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	32.26%
Values	Daily Returns

CSX P 44  vs.  Cardinal Health

126408GX5

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSX P 44 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, 126408GX5 sustained solid returns over the last few months and may actually be approaching a breakup point.

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. Despite fairly unsteady basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 126408GX5 and Cardinal Health

The main advantage of trading using opposite 126408GX5 and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 126408GX5 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 CSX P 44 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.