Correlation Between Cardinal Health and METTLER TOLEDO

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

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

Diversification Opportunities for Cardinal Health and METTLER TOLEDO

-0.71

Correlation Coefficient

Cardinal Health  METTLER TOLEDO

Pay attention - limited upside

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

Pair Corralation between Cardinal Health and METTLER TOLEDO

Assuming the 90 days horizon Cardinal Health is expected to generate 0.95 times more return on investment than METTLER TOLEDO. However, Cardinal Health is 1.05 times less risky than METTLER TOLEDO. It trades about 0.12 of its potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about -0.02 per unit of risk. If you would invest  10,192  in Cardinal Health on September 5, 2024 and sell it today you would earn a total of  1,363  from holding Cardinal Health or generate 13.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Cardinal Health  vs.  METTLER TOLEDO INTL

Cardinal Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, METTLER TOLEDO is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardinal Health and METTLER TOLEDO

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

The idea behind Cardinal Health and METTLER TOLEDO INTL 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.