Correlation Between Cardinal Health and Kite Realty

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

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

Diversification Opportunities for Cardinal Health and Kite Realty

0.79

Correlation Coefficient

Cardinal Health  Kite Realty

Poor diversification

The 3 months correlation between Cardinal and Kite is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Health and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group and Cardinal Health 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 Cardinal Health are associated (or correlated) with Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Cardinal Health i.e., Cardinal Health and Kite Realty go up and down completely randomly.

Pair Corralation between Cardinal Health and Kite Realty

Considering the 90-day investment horizon Cardinal Health is expected to generate 0.89 times more return on investment than Kite Realty. However, Cardinal Health is 1.13 times less risky than Kite Realty. It trades about 0.08 of its potential returns per unit of risk. Kite Realty Group is currently generating about 0.05 per unit of risk. If you would invest  7,615  in Cardinal Health on August 31, 2024 and sell it today you would earn a total of  4,648  from holding Cardinal Health or generate 61.04% return on investment over 90 days.

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

Cardinal Health  vs.  Kite Realty Group

Cardinal Health

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Kite Realty Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kite Realty Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kite Realty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Cardinal Health and Kite Realty

The main advantage of trading using opposite Cardinal Health and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Health position performs unexpectedly, Kite Realty 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 Kite Realty will offset losses from the drop in Kite Realty's long position.

The idea behind Cardinal Health and Kite Realty Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.