Correlation Between Dollar Tree and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Dollar Tree 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 Dollar Tree and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollar Tree and Cardinal Health, you can compare the effects of market volatilities on Dollar Tree 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 Dollar Tree with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollar Tree and Cardinal Health.
Diversification Opportunities for Dollar Tree and Cardinal Health
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dollar and Cardinal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dollar Tree and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Dollar Tree 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 Dollar Tree 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 Dollar Tree i.e., Dollar Tree and Cardinal Health go up and down completely randomly.
Pair Corralation between Dollar Tree and Cardinal Health
Assuming the 90 days trading horizon Dollar Tree is expected to under-perform the Cardinal Health. In addition to that, Dollar Tree is 1.67 times more volatile than Cardinal Health. It trades about -0.05 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.07 per unit of volatility. If you would invest 7,649 in Cardinal Health on August 24, 2024 and sell it today you would earn a total of 4,743 from holding Cardinal Health or generate 62.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dollar Tree vs. Cardinal Health
Performance |
| Timeline |
| Dollar Tree |
| Cardinal Health |
Dollar Tree and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollar Tree and Cardinal Health
The main advantage of trading using opposite Dollar Tree and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollar Tree 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.| Dollar Tree vs. Taylor Maritime Investments | Dollar Tree vs. The Mercantile Investment | Dollar Tree vs. JLEN Environmental Assets | Dollar Tree vs. Beeks Trading |
| Cardinal Health vs. Quadrise Plc | Cardinal Health vs. Intuitive Investments Group | Cardinal Health vs. European Metals Holdings | Cardinal Health vs. Athelney Trust plc |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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