Correlation Between Cardinal Health and MicroStrategy Incorporated

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

By analyzing existing cross correlation between Cardinal Health and MicroStrategy Incorporated 1000, you can compare the effects of market volatilities on Cardinal Health and MicroStrategy Incorporated 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 MicroStrategy Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and MicroStrategy Incorporated.

Diversification Opportunities for Cardinal Health and MicroStrategy Incorporated

0.79

Correlation Coefficient

Cardinal Health  MicroStrategy Incorporated

Poor diversification

The 3 months correlation between Cardinal and MicroStrategy is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and MicroStrategy Incorporated 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroStrategy Incorporated 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 MicroStrategy Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroStrategy Incorporated has no effect on the direction of Cardinal Health i.e., Cardinal Health and MicroStrategy Incorporated go up and down completely randomly.

Pair Corralation between Cardinal Health and MicroStrategy Incorporated

Considering the 90-day investment horizon Cardinal Health is expected to under-perform the MicroStrategy Incorporated. In addition to that, Cardinal Health is 1.21 times more volatile than MicroStrategy Incorporated 1000. It trades about -0.07 of its total potential returns per unit of risk. MicroStrategy Incorporated 1000 is currently generating about -0.01 per unit of volatility. If you would invest  11,760  in MicroStrategy Incorporated 1000 on July 7, 2025 and sell it today you would lose (161.00) from holding MicroStrategy Incorporated 1000 or give up 1.37% of portfolio value over 90 days.

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

Cardinal Health  vs.  MicroStrategy Incorporated 100

Cardinal Health

Risk-Adjusted Performance

Weakest

Over the last 90 days Cardinal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

MicroStrategy Incorporated

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroStrategy Incorporated 1000 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MicroStrategy Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cardinal Health and MicroStrategy Incorporated

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

The idea behind Cardinal Health and MicroStrategy Incorporated 1000 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.