Correlation Between Cardinal Health and Columbia Sportswear

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

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

Diversification Opportunities for Cardinal Health and Columbia Sportswear

-0.48

Correlation Coefficient

Cardinal Health  Columbia Sportswear

Very good diversification

The 3 months correlation between Cardinal and Columbia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Cardinal Health i.e., Cardinal Health and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Cardinal Health and Columbia Sportswear

Assuming the 90 days horizon Cardinal Health is expected to generate 0.68 times more return on investment than Columbia Sportswear. However, Cardinal Health is 1.48 times less risky than Columbia Sportswear. It trades about 0.16 of its potential returns per unit of risk. Columbia Sportswear is currently generating about -0.08 per unit of risk. If you would invest  11,759  in Cardinal Health on April 24, 2025 and sell it today you would earn a total of  1,831  from holding Cardinal Health or generate 15.57% 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.  Columbia Sportswear

Cardinal Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 12 (%) 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.

Columbia Sportswear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Sportswear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cardinal Health and Columbia Sportswear

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

The idea behind Cardinal Health and Columbia Sportswear 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.