Correlation Between Cairn Homes and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Cairn Homes and Cardinal Health 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 Cairn Homes and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Cardinal Health, you can compare the effects of market volatilities on Cairn Homes and Cardinal Health 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 Cairn Homes with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Cardinal Health.
Diversification Opportunities for Cairn Homes and Cardinal Health
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairn and Cardinal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Cairn Homes 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 Cairn Homes PLC are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Cairn Homes i.e., Cairn Homes and Cardinal Health go up and down completely randomly.
Pair Corralation between Cairn Homes and Cardinal Health
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.29 times more return on investment than Cardinal Health. However, Cairn Homes is 1.29 times more volatile than Cardinal Health. It trades about 0.26 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.07 per unit of risk. If you would invest 17,380 in Cairn Homes PLC on September 25, 2024 and sell it today you would earn a total of 1,540 from holding Cairn Homes PLC or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Cardinal Health
Performance |
| Timeline |
| Cairn Homes PLC |
| Cardinal Health |
Cairn Homes and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Cardinal Health
The main advantage of trading using opposite Cairn Homes and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Cairn Homes vs. SupplyMe Capital PLC | Cairn Homes vs. Lloyds Banking Group | Cairn Homes vs. Premier African Minerals | Cairn Homes vs. SANTANDER UK 8 |
| Cardinal Health vs. European Metals Holdings | Cardinal Health vs. Nordic Semiconductor ASA | Cardinal Health vs. Cairn Homes PLC | Cardinal Health vs. bet at home AG |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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