Correlation Between Cardinal Health and Aegon Funding

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

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

Diversification Opportunities for Cardinal Health and Aegon Funding

-0.71

Correlation Coefficient

Cardinal Health  Aegon Funding

Pay attention - limited upside

The 3 months correlation between Cardinal and Aegon is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Aegon Funding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon Funding 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 Aegon Funding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon Funding has no effect on the direction of Cardinal Health i.e., Cardinal Health and Aegon Funding go up and down completely randomly.

Pair Corralation between Cardinal Health and Aegon Funding

Considering the 90-day investment horizon Cardinal Health is expected to generate 1.84 times more return on investment than Aegon Funding. However, Cardinal Health is 1.84 times more volatile than Aegon Funding. It trades about 0.06 of its potential returns per unit of risk. Aegon Funding is currently generating about -0.13 per unit of risk. If you would invest  11,090  in Cardinal Health on September 18, 2024 and sell it today you would earn a total of  565.00  from holding Cardinal Health or generate 5.09% return on investment over 90 days.

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

Cardinal Health  vs.  Aegon Funding

Cardinal Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Aegon Funding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegon Funding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Cardinal Health and Aegon Funding

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

The idea behind Cardinal Health and Aegon Funding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .