Correlation Between Cardinal Health and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and Lamar Advertising 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 Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and Lamar Advertising, you can compare the effects of market volatilities on Cardinal Health and Lamar Advertising 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 Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and Lamar Advertising.
Diversification Opportunities for Cardinal Health and Lamar Advertising
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cardinal and Lamar is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising 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 Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Cardinal Health i.e., Cardinal Health and Lamar Advertising go up and down completely randomly.
Pair Corralation between Cardinal Health and Lamar Advertising
Assuming the 90 days horizon Cardinal Health is expected to generate 1.44 times more return on investment than Lamar Advertising. However, Cardinal Health is 1.44 times more volatile than Lamar Advertising. It trades about 0.29 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.18 per unit of risk. If you would invest 11,275 in Cardinal Health on October 24, 2024 and sell it today you would earn a total of 890.00 from holding Cardinal Health or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cardinal Health vs. Lamar Advertising
Performance |
| Timeline |
| Cardinal Health |
| Lamar Advertising |
Cardinal Health and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and Lamar Advertising
The main advantage of trading using opposite Cardinal Health and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| Cardinal Health vs. STEEL DYNAMICS | Cardinal Health vs. ANGANG STEEL H | Cardinal Health vs. KOBE STEEL LTD | Cardinal Health vs. PULSION Medical Systems |
| Lamar Advertising vs. ALERION CLEANPOWER | Lamar Advertising vs. Carnegie Clean Energy | Lamar Advertising vs. Canadian Utilities Limited | Lamar Advertising vs. Cardinal Health |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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