Correlation Between Travel Leisure and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Travel Leisure 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 Travel Leisure and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Travel Leisure Co and Cardinal Health, you can compare the effects of market volatilities on Travel Leisure 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 Travel Leisure with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travel Leisure and Cardinal Health.
Diversification Opportunities for Travel Leisure and Cardinal Health
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Travel and Cardinal is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Travel Leisure Co and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Travel Leisure 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 Travel Leisure Co 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 Travel Leisure i.e., Travel Leisure and Cardinal Health go up and down completely randomly.
Pair Corralation between Travel Leisure and Cardinal Health
Assuming the 90 days trading horizon Travel Leisure is expected to generate 6.93 times less return on investment than Cardinal Health. In addition to that, Travel Leisure is 1.28 times more volatile than Cardinal Health. It trades about 0.02 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.15 per unit of volatility. If you would invest 9,983 in Cardinal Health on November 7, 2024 and sell it today you would earn a total of 2,716 from holding Cardinal Health or generate 27.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Travel Leisure Co vs. Cardinal Health
Performance |
| Timeline |
| Travel Leisure |
| Cardinal Health |
Travel Leisure and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Travel Leisure and Cardinal Health
The main advantage of trading using opposite Travel Leisure and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travel Leisure 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.| Travel Leisure vs. Fevertree Drinks Plc | Travel Leisure vs. Herald Investment Trust | Travel Leisure vs. Mobius Investment Trust | Travel Leisure vs. BlackRock Frontiers Investment |
| Cardinal Health vs. Jacquet Metal Service | Cardinal Health vs. Cornish Metals | Cardinal Health vs. Applied Materials | Cardinal Health vs. Tata Steel Limited |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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