Correlation Between Cardinal Health, and Honda
Can any of the company-specific risk be diversified away by investing in both Cardinal Health, and Honda 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 Honda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health, and Honda Motor Co, you can compare the effects of market volatilities on Cardinal Health, and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health, and Honda.
Diversification Opportunities for Cardinal Health, and Honda
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and Honda is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health, and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Cardinal Health, i.e., Cardinal Health, and Honda go up and down completely randomly.
Pair Corralation between Cardinal Health, and Honda
Assuming the 90 days trading horizon Cardinal Health, is expected to generate 0.71 times more return on investment than Honda. However, Cardinal Health, is 1.42 times less risky than Honda. It trades about 0.1 of its potential returns per unit of risk. Honda Motor Co is currently generating about 0.05 per unit of risk. If you would invest 37,964 in Cardinal Health, on October 20, 2024 and sell it today you would earn a total of 34,898 from holding Cardinal Health, or generate 91.92% 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. Honda Motor Co
Performance |
| Timeline |
| Cardinal Health, |
| Honda Motor |
Cardinal Health, and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health, and Honda
The main advantage of trading using opposite Cardinal Health, and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health, position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda's long position.| Cardinal Health, vs. Taiwan Semiconductor Manufacturing | Cardinal Health, vs. Apple Inc | Cardinal Health, vs. Alibaba Group Holding | Cardinal Health, vs. Microsoft |
| Honda vs. Cardinal Health, | Honda vs. Healthpeak Properties | Honda vs. HCA Healthcare, | Honda vs. Monster Beverage |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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