Correlation Between TKO Group and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both TKO Group 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 TKO Group and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TKO Group Holdings, and Cardinal Health, you can compare the effects of market volatilities on TKO Group 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 TKO Group with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of TKO Group and Cardinal Health.
Diversification Opportunities for TKO Group and Cardinal Health
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between TKO and Cardinal is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding TKO Group Holdings, and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and TKO Group 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 TKO Group 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 TKO Group i.e., TKO Group and Cardinal Health go up and down completely randomly.
Pair Corralation between TKO Group and Cardinal Health
Considering the 90-day investment horizon TKO Group Holdings, is expected to generate 1.63 times more return on investment than Cardinal Health. However, TKO Group is 1.63 times more volatile than Cardinal Health. It trades about 0.07 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of risk. If you would invest 7,466 in TKO Group Holdings, on August 27, 2024 and sell it today you would earn a total of 6,111 from holding TKO Group Holdings, or generate 81.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TKO Group Holdings, vs. Cardinal Health
Performance |
| Timeline |
| TKO Group Holdings, |
| Cardinal Health |
TKO Group and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TKO Group and Cardinal Health
The main advantage of trading using opposite TKO Group and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKO Group 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.| TKO Group vs. Cardinal Health | TKO Group vs. Meiwu Technology Co | TKO Group vs. Titan Machinery | TKO Group vs. Simon Property Group |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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