Correlation Between Marfrig Global and Cardinal Health

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

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

Diversification Opportunities for Marfrig Global and Cardinal Health

0.75

Correlation Coefficient

Marfrig Global  Cardinal Health

Poor diversification

The 3 months correlation between Marfrig and Cardinal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Marfrig Global 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 Marfrig Global Foods 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 Marfrig Global i.e., Marfrig Global and Cardinal Health go up and down completely randomly.

Pair Corralation between Marfrig Global and Cardinal Health

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 2.38 times more return on investment than Cardinal Health. However, Marfrig Global is 2.38 times more volatile than Cardinal Health. It trades about 0.06 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.05 per unit of risk. If you would invest  204.00  in Marfrig Global Foods on September 19, 2024 and sell it today you would earn a total of  85.00  from holding Marfrig Global Foods or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Marfrig Global Foods  vs.  Cardinal Health

Marfrig Global Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 5 (%) 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.

Pair Trading with Marfrig Global and Cardinal Health

The main advantage of trading using opposite Marfrig Global and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global 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 Marfrig Global Foods 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..