Correlation Between Cardinal Health and RenaissanceRe Holdings
Can any of the company-specific risk be diversified away by investing in both Cardinal Health and RenaissanceRe Holdings 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 RenaissanceRe Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardinal Health and RenaissanceRe Holdings, you can compare the effects of market volatilities on Cardinal Health and RenaissanceRe Holdings 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 RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Health and RenaissanceRe Holdings.
Diversification Opportunities for Cardinal Health and RenaissanceRe Holdings
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cardinal and RenaissanceRe is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe Holdings 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 RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of Cardinal Health i.e., Cardinal Health and RenaissanceRe Holdings go up and down completely randomly.
Pair Corralation between Cardinal Health and RenaissanceRe Holdings
Assuming the 90 days horizon Cardinal Health is expected to generate 1.34 times more return on investment than RenaissanceRe Holdings. However, Cardinal Health is 1.34 times more volatile than RenaissanceRe Holdings. It trades about 0.31 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about 0.08 per unit of risk. If you would invest 11,335 in Cardinal Health on October 26, 2024 and sell it today you would earn a total of 990.00 from holding Cardinal Health or generate 8.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Cardinal Health vs. RenaissanceRe Holdings
Performance |
| Timeline |
| Cardinal Health |
| RenaissanceRe Holdings |
Cardinal Health and RenaissanceRe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardinal Health and RenaissanceRe Holdings
The main advantage of trading using opposite Cardinal Health and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, RenaissanceRe Holdings 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 RenaissanceRe Holdings will offset losses from the drop in RenaissanceRe Holdings' long position.| Cardinal Health vs. Henry Schein | Cardinal Health vs. Shanghai Pharmaceuticals Holding | Cardinal Health vs. Sinopharm Group Co |
| RenaissanceRe Holdings vs. CHINA EDUCATION GROUP | RenaissanceRe Holdings vs. TITANIUM TRANSPORTGROUP | RenaissanceRe Holdings vs. DEVRY EDUCATION GRP | RenaissanceRe Holdings vs. Strategic Education |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |