Correlation Between LGI Homes and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both LGI 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 LGI 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 LGI Homes and Cardinal Health, you can compare the effects of market volatilities on LGI 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 LGI Homes with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LGI Homes and Cardinal Health.
Diversification Opportunities for LGI Homes and Cardinal Health
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGI and Cardinal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding LGI Homes and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and LGI 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 LGI Homes 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 LGI Homes i.e., LGI Homes and Cardinal Health go up and down completely randomly.
Pair Corralation between LGI Homes and Cardinal Health
Given the investment horizon of 90 days LGI Homes is expected to generate 1.54 times more return on investment than Cardinal Health. However, LGI Homes is 1.54 times more volatile than Cardinal Health. It trades about -0.02 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.21 per unit of risk. If you would invest 10,393 in LGI Homes on September 14, 2024 and sell it today you would lose (154.00) from holding LGI Homes or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LGI Homes vs. Cardinal Health
Performance |
| Timeline |
| LGI Homes |
| Cardinal Health |
LGI Homes and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LGI Homes and Cardinal Health
The main advantage of trading using opposite LGI Homes and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LGI 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.| LGI Homes vs. MI Homes | LGI Homes vs. Taylor Morn Home | LGI Homes vs. TRI Pointe Homes | LGI Homes vs. Beazer Homes USA |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |