Correlation Between Cardinal Health and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Molson Coors 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 Molson Coors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Molson Coors Beverage, you can compare the effects of market volatilities on Cardinal Health and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Molson Coors.
Diversification Opportunities for Cardinal Health and Molson Coors
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cardinal and Molson is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Cardinal Health i.e., Cardinal Health and Molson Coors go up and down completely randomly.
Pair Corralation between Cardinal Health and Molson Coors
Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.23 times more return on investment than Molson Coors. However, Cardinal Health is 1.23 times more volatile than Molson Coors Beverage. It trades about 0.21 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.25 per unit of risk. If you would invest 11,082 in Cardinal Health on August 29, 2024 and sell it today you would earn a total of 1,126 from holding Cardinal Health or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Molson Coors Beverage
Performance |
| Timeline |
| Cardinal Health |
| Molson Coors Beverage |
Cardinal Health and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Molson Coors
The main advantage of trading using opposite Cardinal Health and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| Cardinal Health vs. Lendinvest PLC | Cardinal Health vs. Neometals | Cardinal Health vs. Coor Service Management | Cardinal Health vs. Albion Technology General |
| Molson Coors vs. Lendinvest PLC | Molson Coors vs. Neometals | Molson Coors vs. Coor Service Management | Molson Coors vs. Albion Technology General |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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