Correlation Between Cardinal Health and Essendant

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

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

Diversification Opportunities for Cardinal Health and Essendant

0.0

Correlation Coefficient

Cardinal Health  Essendant

Pay attention - limited upside

The 3 months correlation between Cardinal and Essendant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Essendant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essendant and Cardinal Health 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 Cardinal Health are associated (or correlated) with Essendant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essendant has no effect on the direction of Cardinal Health i.e., Cardinal Health and Essendant go up and down completely randomly.

Pair Corralation between Cardinal Health and Essendant

If you would invest  0.00  in Essendant on February 20, 2024 and sell it today you would earn a total of  0.00  from holding Essendant or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Cardinal Health  vs.  Essendant

Cardinal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardinal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Essendant

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essendant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Essendant is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cardinal Health and Essendant

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

The idea behind Cardinal Health and Essendant 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.