Correlation Between Virtus Investment and CARDINAL HEALTH

Can any of the company-specific risk be diversified away by investing in both Virtus Investment 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 Virtus Investment and CARDINAL HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Virtus Investment Partners and CARDINAL HEALTH, you can compare the effects of market volatilities on Virtus Investment 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 Virtus Investment with a short position of CARDINAL HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Investment and CARDINAL HEALTH.

Diversification Opportunities for Virtus Investment and CARDINAL HEALTH

0.91

Correlation Coefficient

Virtus Investment  CARDINAL HEALTH

Almost no diversification

The 3 months correlation between Virtus and CARDINAL is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and Virtus Investment 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 Virtus Investment Partners 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 Virtus Investment i.e., Virtus Investment and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between Virtus Investment and CARDINAL HEALTH

Assuming the 90 days horizon Virtus Investment Partners is expected to generate 1.46 times more return on investment than CARDINAL HEALTH. However, Virtus Investment is 1.46 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 0.14 per unit of risk. If you would invest  18,397  in Virtus Investment Partners on October 8, 2024 and sell it today you would earn a total of  2,803  from holding Virtus Investment Partners or generate 15.24% return on investment over 90 days.

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

Virtus Investment Partners  vs.  CARDINAL HEALTH

Virtus Investment

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

CARDINAL HEALTH

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Investment and CARDINAL HEALTH

The main advantage of trading using opposite Virtus Investment and CARDINAL HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Investment 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 Virtus Investment Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.