Correlation Between Cardinal Health and Sonos
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Sonos 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 Sonos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Sonos Inc, you can compare the effects of market volatilities on Cardinal Health and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Sonos.
Diversification Opportunities for Cardinal Health and Sonos
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardinal and Sonos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Cardinal Health i.e., Cardinal Health and Sonos go up and down completely randomly.
Pair Corralation between Cardinal Health and Sonos
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.75 times more return on investment than Sonos. However, Cardinal Health is 1.33 times less risky than Sonos. It trades about 0.22 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.09 per unit of risk. If you would invest 11,006 in Cardinal Health on August 30, 2024 and sell it today you would earn a total of 1,257 from holding Cardinal Health or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Sonos Inc
Performance |
| Timeline |
| Cardinal Health |
| Sonos Inc |
Cardinal Health and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Sonos
The main advantage of trading using opposite Cardinal Health and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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