Correlation Between National CineMedia and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both National CineMedia 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 National CineMedia and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National CineMedia and Cardinal Health, you can compare the effects of market volatilities on National CineMedia 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 National CineMedia with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of National CineMedia and Cardinal Health.
Diversification Opportunities for National CineMedia and Cardinal Health
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Cardinal is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and National CineMedia 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 National CineMedia 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 National CineMedia i.e., National CineMedia and Cardinal Health go up and down completely randomly.
Pair Corralation between National CineMedia and Cardinal Health
Given the investment horizon of 90 days National CineMedia is expected to under-perform the Cardinal Health. In addition to that, National CineMedia is 1.34 times more volatile than Cardinal Health. It trades about -0.04 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.26 per unit of volatility. If you would invest 10,852 in Cardinal Health on September 1, 2024 and sell it today you would earn a total of 1,372 from holding Cardinal Health or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National CineMedia vs. Cardinal Health
Performance |
| Timeline |
| National CineMedia |
| Cardinal Health |
National CineMedia and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National CineMedia and Cardinal Health
The main advantage of trading using opposite National CineMedia and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National CineMedia 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.| National CineMedia vs. Mirriad Advertising plc | National CineMedia vs. INEO Tech Corp | National CineMedia vs. Kidoz Inc | National CineMedia vs. Marchex |
| Cardinal Health vs. Humana Inc | Cardinal Health vs. Cigna Corp | Cardinal Health vs. Elevance Health | Cardinal Health vs. Centene Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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