Correlation Between RYMAN HEALTHCAR and CARDINAL HEALTH

Can any of the company-specific risk be diversified away by investing in both RYMAN HEALTHCAR 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 RYMAN HEALTHCAR and CARDINAL HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RYMAN HEALTHCAR and CARDINAL HEALTH, you can compare the effects of market volatilities on RYMAN HEALTHCAR 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 RYMAN HEALTHCAR with a short position of CARDINAL HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of RYMAN HEALTHCAR and CARDINAL HEALTH.

Diversification Opportunities for RYMAN HEALTHCAR and CARDINAL HEALTH

-0.16

Correlation Coefficient

RYMAN HEALTHCAR  CARDINAL HEALTH

Good diversification

The 3 months correlation between RYMAN and CARDINAL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding RYMAN HEALTHCAR and CARDINAL HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARDINAL HEALTH and RYMAN HEALTHCAR 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 RYMAN HEALTHCAR 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 RYMAN HEALTHCAR i.e., RYMAN HEALTHCAR and CARDINAL HEALTH go up and down completely randomly.

Pair Corralation between RYMAN HEALTHCAR and CARDINAL HEALTH

Assuming the 90 days trading horizon RYMAN HEALTHCAR is expected to generate 46.4 times less return on investment than CARDINAL HEALTH. In addition to that, RYMAN HEALTHCAR is 1.2 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 0.14 per unit of volatility. If you would invest  10,130  in CARDINAL HEALTH on October 8, 2024 and sell it today you would earn a total of  1,330  from holding CARDINAL HEALTH or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

RYMAN HEALTHCAR  vs.  CARDINAL HEALTH

RYMAN HEALTHCAR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RYMAN HEALTHCAR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, RYMAN HEALTHCAR is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CARDINAL HEALTH

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CARDINAL HEALTH are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, CARDINAL HEALTH unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RYMAN HEALTHCAR and CARDINAL HEALTH

The main advantage of trading using opposite RYMAN HEALTHCAR and CARDINAL HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RYMAN HEALTHCAR 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 RYMAN HEALTHCAR 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.