Correlation Between 908 Devices and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both 908 Devices 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 908 Devices and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 908 Devices and Cardinal Health, you can compare the effects of market volatilities on 908 Devices 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 908 Devices with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 908 Devices and Cardinal Health.

Diversification Opportunities for 908 Devices and Cardinal Health

0.42

Correlation Coefficient

908 Devices  Cardinal Health

Very weak diversification

The 3 months correlation between 908 and Cardinal is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding 908 Devices and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and 908 Devices 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 908 Devices 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 908 Devices i.e., 908 Devices and Cardinal Health go up and down completely randomly.

Pair Corralation between 908 Devices and Cardinal Health

Given the investment horizon of 90 days 908 Devices is expected to generate 2.74 times more return on investment than Cardinal Health. However, 908 Devices is 2.74 times more volatile than Cardinal Health. It trades about -0.04 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.13 per unit of risk. If you would invest  723.00  in 908 Devices on March 3, 2024 and sell it today you would lose (93.00) from holding 908 Devices or give up 12.86% of portfolio value over 90 days.

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

908 Devices  vs.  Cardinal Health

908 Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 908 Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 unfluctuating 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.

Pair Trading with 908 Devices and Cardinal Health

The main advantage of trading using opposite 908 Devices and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 908 Devices 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 908 Devices 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.