Correlation Between Retail Estates and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Cardinal Health, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Cardinal Health.
Diversification Opportunities for Retail Estates and Cardinal Health
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Retail and Cardinal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Cardinal Health go up and down completely randomly.
Pair Corralation between Retail Estates and Cardinal Health
Assuming the 90 days trading horizon Retail Estates NV is expected to generate 4.07 times more return on investment than Cardinal Health. However, Retail Estates is 4.07 times more volatile than Cardinal Health. It trades about 0.11 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.2 per unit of risk. If you would invest 6,360 in Retail Estates NV on August 28, 2024 and sell it today you would earn a total of 850.00 from holding Retail Estates NV or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Retail Estates NV vs. Cardinal Health
Performance |
| Timeline |
| Retail Estates NV |
| Cardinal Health |
Retail Estates and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Cardinal Health
The main advantage of trading using opposite Retail Estates and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Samsung Electronics Co | Retail Estates vs. Samsung Electronics Co | Retail Estates vs. Hyundai Motor | Retail Estates vs. Toyota Motor Corp |
| Cardinal Health vs. Sabre Insurance Group | Cardinal Health vs. Cairo Communication SpA | Cardinal Health vs. Deltex Medical Group | Cardinal Health vs. UNIQA Insurance Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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