Correlation Between Cardinal Health and PENN Entertainment
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and PENN Entertainment 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 PENN Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and PENN Entertainment, you can compare the effects of market volatilities on Cardinal Health and PENN Entertainment 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 PENN Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and PENN Entertainment.
Diversification Opportunities for Cardinal Health and PENN Entertainment
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cardinal and PENN is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment 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 PENN Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment has no effect on the direction of Cardinal Health i.e., Cardinal Health and PENN Entertainment go up and down completely randomly.
Pair Corralation between Cardinal Health and PENN Entertainment
Assuming the 90 days horizon Cardinal Health is expected to generate 1.22 times less return on investment than PENN Entertainment. But when comparing it to its historical volatility, Cardinal Health is 1.69 times less risky than PENN Entertainment. It trades about 0.17 of its potential returns per unit of risk. PENN Entertainment is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,859 in PENN Entertainment on November 8, 2024 and sell it today you would earn a total of 138.00 from holding PENN Entertainment or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cardinal Health vs. PENN Entertainment
Performance |
| Timeline |
| Cardinal Health |
| PENN Entertainment |
Cardinal Health and PENN Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and PENN Entertainment
The main advantage of trading using opposite Cardinal Health and PENN Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, PENN Entertainment 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 PENN Entertainment will offset losses from the drop in PENN Entertainment's long position.| Cardinal Health vs. Calibre Mining Corp | Cardinal Health vs. KOBE STEEL LTD | Cardinal Health vs. ITALIAN WINE BRANDS | Cardinal Health vs. East Africa Metals |
| PENN Entertainment vs. SIVERS SEMICONDUCTORS AB | PENN Entertainment vs. NorAm Drilling AS | PENN Entertainment vs. Volkswagen AG | PENN Entertainment vs. Darden Restaurants |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |