Correlation Between Cardinal Health and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Titan Machinery 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 Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Titan Machinery, you can compare the effects of market volatilities on Cardinal Health and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Titan Machinery.
Diversification Opportunities for Cardinal Health and Titan Machinery
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and Titan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Cardinal Health i.e., Cardinal Health and Titan Machinery go up and down completely randomly.
Pair Corralation between Cardinal Health and Titan Machinery
Considering the 90-day investment horizon Cardinal Health is expected to generate 0.5 times more return on investment than Titan Machinery. However, Cardinal Health is 1.99 times less risky than Titan Machinery. It trades about 0.08 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.04 per unit of risk. If you would invest 8,223 in Cardinal Health on August 27, 2024 and sell it today you would earn a total of 3,961 from holding Cardinal Health or generate 48.17% 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. Titan Machinery
Performance |
| Timeline |
| Cardinal Health |
| Titan Machinery |
Cardinal Health and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Titan Machinery
The main advantage of trading using opposite Cardinal Health and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
| Titan Machinery vs. Global Industrial Co | Titan Machinery vs. WESCO International | Titan Machinery vs. MSC Industrial Direct |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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