Correlation Between Cardinal Health and EnVVeno Medical

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

By analyzing existing cross correlation between Cardinal Health and enVVeno Medical Corp, you can compare the effects of market volatilities on Cardinal Health and EnVVeno Medical 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 EnVVeno Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and EnVVeno Medical.

Diversification Opportunities for Cardinal Health and EnVVeno Medical

0.62

Correlation Coefficient

Cardinal Health  EnVVeno Medical

Poor diversification

The 3 months correlation between Cardinal and EnVVeno is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and enVVeno Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enVVeno Medical Corp 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 EnVVeno Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enVVeno Medical Corp has no effect on the direction of Cardinal Health i.e., Cardinal Health and EnVVeno Medical go up and down completely randomly.

Pair Corralation between Cardinal Health and EnVVeno Medical

Considering the 90-day investment horizon Cardinal Health is expected to generate 1.03 times less return on investment than EnVVeno Medical. But when comparing it to its historical volatility, Cardinal Health is 3.61 times less risky than EnVVeno Medical. It trades about 0.07 of its potential returns per unit of risk. enVVeno Medical Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  490.00  in enVVeno Medical Corp on March 21, 2024 and sell it today you would lose (20.00) from holding enVVeno Medical Corp or give up 4.08% of portfolio value over 90 days.

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

Cardinal Health  vs.  enVVeno Medical Corp

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 latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

enVVeno Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days enVVeno Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cardinal Health and EnVVeno Medical

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

The idea behind Cardinal Health and enVVeno Medical Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.