Correlation Between Cardinal Health and Target Healthcare

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

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

Diversification Opportunities for Cardinal Health and Target Healthcare

0.75

Correlation Coefficient

Cardinal Health  Target Healthcare

Poor diversification

The 3 months correlation between Cardinal and Target is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Cardinal Health i.e., Cardinal Health and Target Healthcare go up and down completely randomly.

Pair Corralation between Cardinal Health and Target Healthcare

Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.1 times more return on investment than Target Healthcare. However, Cardinal Health is 1.1 times more volatile than Target Healthcare REIT. It trades about 0.2 of its potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.02 per unit of risk. If you would invest  13,631  in Cardinal Health on April 25, 2025 and sell it today you would earn a total of  2,049  from holding Cardinal Health or generate 15.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Cardinal Health  vs.  Target Healthcare REIT

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cardinal Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Target Healthcare REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Target Healthcare REIT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Target Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cardinal Health and Target Healthcare

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

The idea behind Cardinal Health and Target Healthcare REIT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.