Correlation Between LuxUrban Hotels and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both LuxUrban Hotels 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 LuxUrban Hotels and Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Cardinal Health, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Cardinal Health.

Diversification Opportunities for LuxUrban Hotels and Cardinal Health

0.41

Correlation Coefficient

LuxUrban Hotels  Cardinal Health

Very weak diversification

The 3 months correlation between LuxUrban and Cardinal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Cardinal Health go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Cardinal Health

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to generate 2.57 times more return on investment than Cardinal Health. However, LuxUrban Hotels is 2.57 times more volatile than Cardinal Health. It trades about 0.17 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.07 per unit of risk. If you would invest  1,425  in LuxUrban Hotels 1300 on October 9, 2024 and sell it today you would earn a total of  110.00  from holding LuxUrban Hotels 1300 or generate 7.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

LuxUrban Hotels 1300  vs.  Cardinal Health

LuxUrban Hotels 1300

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, LuxUrban Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cardinal Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with LuxUrban Hotels and Cardinal Health

The main advantage of trading using opposite LuxUrban Hotels and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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.

The idea behind LuxUrban Hotels 1300 and Cardinal Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..