Correlation Between Cardinal Health and Mesa Air

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

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

Diversification Opportunities for Cardinal Health and Mesa Air

-0.41

Correlation Coefficient

Cardinal Health  Mesa Air

Very good diversification

The 3 months correlation between Cardinal and Mesa is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Cardinal Health i.e., Cardinal Health and Mesa Air go up and down completely randomly.

Pair Corralation between Cardinal Health and Mesa Air

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.37 times more return on investment than Mesa Air. However, Cardinal Health is 2.7 times less risky than Mesa Air. It trades about 0.05 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.04 per unit of risk. If you would invest  11,276  in Cardinal Health on September 16, 2024 and sell it today you would earn a total of  534.00  from holding Cardinal Health or generate 4.74% return on investment over 90 days.

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

Cardinal Health  vs.  Mesa Air Group

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.

Mesa Air Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cardinal Health and Mesa Air

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

The idea behind Cardinal Health and Mesa Air Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.