Correlation Between Hilton Food and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Cardinal Health, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Cardinal Health.
Diversification Opportunities for Hilton Food and Cardinal Health
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hilton and Cardinal is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Cardinal Health go up and down completely randomly.
Pair Corralation between Hilton Food and Cardinal Health
Assuming the 90 days trading horizon Hilton Food Group is expected to under-perform the Cardinal Health. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Food Group is 1.65 times less risky than Cardinal Health. The stock trades about -0.01 of its potential returns per unit of risk. The Cardinal Health is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 11,082 in Cardinal Health on August 28, 2024 and sell it today you would earn a total of 1,066 from holding Cardinal Health or generate 9.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Food Group vs. Cardinal Health
Performance |
| Timeline |
| Hilton Food Group |
| Cardinal Health |
Hilton Food and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Cardinal Health
The main advantage of trading using opposite Hilton Food and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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.| Hilton Food vs. Walmart | Hilton Food vs. BYD Co | Hilton Food vs. Volkswagen AG Non Vtg | Hilton Food vs. Deutsche Post AG |
| Cardinal Health vs. Arrow Electronics | Cardinal Health vs. Zoom Video Communications | Cardinal Health vs. BE Semiconductor Industries | Cardinal Health vs. Compagnie Plastic Omnium |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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