Correlation Between Cardinal Health and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and HCA Healthcare 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 HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and HCA Healthcare, you can compare the effects of market volatilities on Cardinal Health and HCA Healthcare 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 HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and HCA Healthcare.
Diversification Opportunities for Cardinal Health and HCA Healthcare
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cardinal and HCA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare 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 HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Cardinal Health i.e., Cardinal Health and HCA Healthcare go up and down completely randomly.
Pair Corralation between Cardinal Health and HCA Healthcare
Assuming the 90 days trading horizon Cardinal Health is expected to generate 2.11 times less return on investment than HCA Healthcare. But when comparing it to its historical volatility, Cardinal Health is 1.63 times less risky than HCA Healthcare. It trades about 0.23 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 29,769 in HCA Healthcare on November 7, 2024 and sell it today you would earn a total of 3,728 from holding HCA Healthcare or generate 12.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. HCA Healthcare
Performance |
| Timeline |
| Cardinal Health |
| HCA Healthcare |
Cardinal Health and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and HCA Healthcare
The main advantage of trading using opposite Cardinal Health and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Cardinal Health vs. Jacquet Metal Service | Cardinal Health vs. Cornish Metals | Cardinal Health vs. Applied Materials | Cardinal Health vs. Tata Steel Limited |
| HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Samsung Electronics Co | HCA Healthcare vs. Toyota Motor Corp | HCA Healthcare vs. Reliance Industries Ltd |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |