Correlation Between Cardinal Health and Dine Brands
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Dine Brands 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 Dine Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Dine Brands Global, you can compare the effects of market volatilities on Cardinal Health and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Dine Brands.
Diversification Opportunities for Cardinal Health and Dine Brands
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and Dine is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Cardinal Health i.e., Cardinal Health and Dine Brands go up and down completely randomly.
Pair Corralation between Cardinal Health and Dine Brands
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.49 times more return on investment than Dine Brands. However, Cardinal Health is 2.04 times less risky than Dine Brands. It trades about 0.07 of its potential returns per unit of risk. Dine Brands Global is currently generating about -0.04 per unit of risk. If you would invest 10,085 in Cardinal Health on November 4, 2024 and sell it today you would earn a total of 2,281 from holding Cardinal Health or generate 22.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Dine Brands Global
Performance |
| Timeline |
| Cardinal Health |
| Dine Brands Global |
Cardinal Health and Dine Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Dine Brands
The main advantage of trading using opposite Cardinal Health and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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