Correlation Between Cardinal Health and Oncolytics Biotech

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

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

Diversification Opportunities for Cardinal Health and Oncolytics Biotech

0.34

Correlation Coefficient

Cardinal Health  Oncolytics Biotech

Weak diversification

The 3 months correlation between Cardinal and Oncolytics is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Oncolytics Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncolytics Biotech 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 Oncolytics Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncolytics Biotech has no effect on the direction of Cardinal Health i.e., Cardinal Health and Oncolytics Biotech go up and down completely randomly.

Pair Corralation between Cardinal Health and Oncolytics Biotech

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.32 times more return on investment than Oncolytics Biotech. However, Cardinal Health is 3.11 times less risky than Oncolytics Biotech. It trades about 0.06 of its potential returns per unit of risk. Oncolytics Biotech is currently generating about -0.01 per unit of risk. If you would invest  10,142  in Cardinal Health on August 13, 2024 and sell it today you would earn a total of  1,914  from holding Cardinal Health or generate 18.87% return on investment over 90 days.

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

Cardinal Health  vs.  Oncolytics Biotech

Cardinal Health

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Cardinal Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Oncolytics Biotech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oncolytics Biotech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Oncolytics Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardinal Health and Oncolytics Biotech

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

The idea behind Cardinal Health and Oncolytics Biotech 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.