Correlation Between CARDINAL HEALTH and Chesapeake Utilities

Can any of the company-specific risk be diversified away by investing in both CARDINAL HEALTH and Chesapeake Utilities 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 Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CARDINAL HEALTH and Chesapeake Utilities, you can compare the effects of market volatilities on CARDINAL HEALTH and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARDINAL HEALTH and Chesapeake Utilities.

Diversification Opportunities for CARDINAL HEALTH and Chesapeake Utilities

-0.78

Correlation Coefficient

CARDINAL HEALTH  Chesapeake Utilities

Pay attention - limited upside

The 3 months correlation between CARDINAL and Chesapeake is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding CARDINAL HEALTH and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of CARDINAL HEALTH i.e., CARDINAL HEALTH and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between CARDINAL HEALTH and Chesapeake Utilities

Assuming the 90 days trading horizon CARDINAL HEALTH is expected to generate 0.74 times more return on investment than Chesapeake Utilities. However, CARDINAL HEALTH is 1.35 times less risky than Chesapeake Utilities. It trades about 0.17 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.09 per unit of risk. If you would invest  11,924  in CARDINAL HEALTH on April 25, 2025 and sell it today you would earn a total of  1,516  from holding CARDINAL HEALTH or generate 12.71% return on investment over 90 days.

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

CARDINAL HEALTH  vs.  Chesapeake Utilities

CARDINAL HEALTH

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, CARDINAL HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities 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 Chesapeake Utilities

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

The idea behind CARDINAL HEALTH and Chesapeake Utilities 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.