Correlation Between AmerisourceBergen and McKesson
Can any of the company-specific risk be diversified away by investing in both AmerisourceBergen and McKesson 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 AmerisourceBergen and McKesson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmerisourceBergen and McKesson, you can compare the effects of market volatilities on AmerisourceBergen and McKesson 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 AmerisourceBergen with a short position of McKesson. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmerisourceBergen and McKesson.
Diversification Opportunities for AmerisourceBergen and McKesson
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AmerisourceBergen and McKesson is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AmerisourceBergen and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and AmerisourceBergen 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 AmerisourceBergen are associated (or correlated) with McKesson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McKesson has no effect on the direction of AmerisourceBergen i.e., AmerisourceBergen and McKesson go up and down completely randomly.
Pair Corralation between AmerisourceBergen and McKesson
If you would invest 48,273 in McKesson on October 20, 2024 and sell it today you would earn a total of 10,984 from holding McKesson or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.4% |
| Values | Daily Returns |
AmerisourceBergen vs. McKesson
Performance |
| Timeline |
| AmerisourceBergen |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| McKesson |
AmerisourceBergen and McKesson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmerisourceBergen and McKesson
The main advantage of trading using opposite AmerisourceBergen and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmerisourceBergen position performs unexpectedly, McKesson 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 McKesson will offset losses from the drop in McKesson's long position.| AmerisourceBergen vs. Cardinal Health | AmerisourceBergen vs. Henry Schein | AmerisourceBergen vs. Owens Minor | AmerisourceBergen vs. Patterson Companies |
| McKesson vs. Cardinal Health | McKesson vs. Henry Schein | McKesson vs. Patterson Companies | McKesson vs. Owens Minor |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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