Correlation Between Cardinal Health and Hilton Food
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Hilton Food 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 Hilton Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Hilton Food Group, you can compare the effects of market volatilities on Cardinal Health and Hilton Food 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 Hilton Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Hilton Food.
Diversification Opportunities for Cardinal Health and Hilton Food
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and Hilton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food Group 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Cardinal Health i.e., Cardinal Health and Hilton Food go up and down completely randomly.
Pair Corralation between Cardinal Health and Hilton Food
Assuming the 90 days trading horizon Cardinal Health is expected to generate 1.65 times more return on investment than Hilton Food. However, Cardinal Health is 1.65 times more volatile than Hilton Food Group. It trades about 0.21 of its potential returns per unit of risk. Hilton Food Group is currently generating about -0.01 per unit of risk. If you would invest 11,082 in Cardinal Health on August 28, 2024 and sell it today you would earn a total of 1,066 from holding Cardinal Health or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Hilton Food Group
Performance |
| Timeline |
| Cardinal Health |
| Hilton Food Group |
Cardinal Health and Hilton Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Hilton Food
The main advantage of trading using opposite Cardinal Health and Hilton Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Hilton Food 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 Hilton Food will offset losses from the drop in Hilton Food's 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 |
| Hilton Food vs. Walmart | Hilton Food vs. BYD Co | Hilton Food vs. Volkswagen AG Non Vtg | Hilton Food vs. Deutsche Post AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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