Correlation Between Ross Stores and Cardinal Health

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

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

Diversification Opportunities for Ross Stores and Cardinal Health

-0.57

Correlation Coefficient

Ross Stores  Cardinal Health

Excellent diversification

The 3 months correlation between Ross and Cardinal is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Cardinal Health go up and down completely randomly.

Pair Corralation between Ross Stores and Cardinal Health

Assuming the 90 days trading horizon Ross Stores is expected to under-perform the Cardinal Health. In addition to that, Ross Stores is 1.81 times more volatile than Cardinal Health. It trades about -0.01 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.22 per unit of volatility. If you would invest  13,546  in Cardinal Health on April 24, 2025 and sell it today you would earn a total of  2,286  from holding Cardinal Health or generate 16.88% return on investment over 90 days.

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

Ross Stores  vs.  Cardinal Health

Ross Stores

Risk-Adjusted Performance

Very Weak

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

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 17 (%) 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.

Pair Trading with Ross Stores and Cardinal Health

The main advantage of trading using opposite Ross Stores and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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 Ross Stores 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.