Correlation Between Cardinal Health and Host Hotels
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Host Hotels 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 Host Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Host Hotels Resorts, you can compare the effects of market volatilities on Cardinal Health and Host Hotels 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 Host Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Host Hotels.
Diversification Opportunities for Cardinal Health and Host Hotels
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cardinal and Host is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Host Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Host Hotels Resorts 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 Host Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Host Hotels Resorts has no effect on the direction of Cardinal Health i.e., Cardinal Health and Host Hotels go up and down completely randomly.
Pair Corralation between Cardinal Health and Host Hotels
Assuming the 90 days trading horizon Cardinal Health is expected to generate 0.98 times more return on investment than Host Hotels. However, Cardinal Health is 1.03 times less risky than Host Hotels. It trades about 0.11 of its potential returns per unit of risk. Host Hotels Resorts is currently generating about 0.09 per unit of risk. If you would invest 11,033 in Cardinal Health on August 28, 2024 and sell it today you would earn a total of 1,115 from holding Cardinal Health or generate 10.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Host Hotels Resorts
Performance |
| Timeline |
| Cardinal Health |
| Host Hotels Resorts |
Cardinal Health and Host Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Host Hotels
The main advantage of trading using opposite Cardinal Health and Host Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Host Hotels 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 Host Hotels will offset losses from the drop in Host Hotels' long position.| Cardinal Health vs. Arrow Electronics | Cardinal Health vs. Zoom Video Communications | Cardinal Health vs. BE Semiconductor Industries | Cardinal Health vs. Compagnie Plastic Omnium |
| Host Hotels vs. International Consolidated Airlines | Host Hotels vs. United Airlines Holdings | Host Hotels vs. Verizon Communications | Host Hotels vs. Ameriprise Financial |
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 Stocks Directory module to find actively traded stocks across global markets.
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