Correlation Between RCI Hospitality and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Cardinal Health, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Cardinal Health.
Diversification Opportunities for RCI Hospitality and Cardinal Health
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RCI and Cardinal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and RCI Hospitality 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 RCI Hospitality Holdings 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 RCI Hospitality i.e., RCI Hospitality and Cardinal Health go up and down completely randomly.
Pair Corralation between RCI Hospitality and Cardinal Health
Given the investment horizon of 90 days RCI Hospitality Holdings is expected to under-perform the Cardinal Health. In addition to that, RCI Hospitality is 1.83 times more volatile than Cardinal Health. It trades about 0.0 of its total potential returns per unit of risk. Cardinal Health is currently generating about 0.07 per unit of volatility. If you would invest 10,085 in Cardinal Health on November 4, 2024 and sell it today you would earn a total of 2,281 from holding Cardinal Health or generate 22.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RCI Hospitality Holdings vs. Cardinal Health
Performance |
Timeline |
RCI Hospitality Holdings |
Cardinal Health |
RCI Hospitality and Cardinal Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCI Hospitality and Cardinal Health
The main advantage of trading using opposite RCI Hospitality and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Transaction History View history of all your transactions and understand their impact on performance | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |