Correlation Between Spirent Communications and Cardinal Health

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

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

Diversification Opportunities for Spirent Communications and Cardinal Health

0.85

Correlation Coefficient

Spirent Communications  Cardinal Health

Very poor diversification

The 3 months correlation between Spirent and Cardinal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Cardinal Health go up and down completely randomly.

Pair Corralation between Spirent Communications and Cardinal Health

Assuming the 90 days trading horizon Spirent Communications is expected to generate 1.54 times less return on investment than Cardinal Health. But when comparing it to its historical volatility, Spirent Communications plc is 1.9 times less risky than Cardinal Health. It trades about 0.32 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  13,229  in Cardinal Health on April 22, 2025 and sell it today you would earn a total of  2,680  from holding Cardinal Health or generate 20.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Spirent Communications plc  vs.  Cardinal Health

Spirent Communications

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Spirent Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Cardinal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Cardinal Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spirent Communications and Cardinal Health

The main advantage of trading using opposite Spirent Communications and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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 Spirent Communications plc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.