Correlation Between McKesson and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both McKesson and Pembina Pipeline 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 McKesson and Pembina Pipeline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McKesson and Pembina Pipeline, you can compare the effects of market volatilities on McKesson and Pembina Pipeline 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 McKesson with a short position of Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of McKesson and Pembina Pipeline.
Diversification Opportunities for McKesson and Pembina Pipeline
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between McKesson and Pembina is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Pembina Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline and McKesson 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 McKesson are associated (or correlated) with Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline has no effect on the direction of McKesson i.e., McKesson and Pembina Pipeline go up and down completely randomly.
Pair Corralation between McKesson and Pembina Pipeline
Considering the 90-day investment horizon McKesson is expected to generate 16.48 times more return on investment than Pembina Pipeline. However, McKesson is 16.48 times more volatile than Pembina Pipeline. It trades about 0.06 of its potential returns per unit of risk. Pembina Pipeline is currently generating about 0.22 per unit of risk. If you would invest 58,396 in McKesson on October 11, 2024 and sell it today you would earn a total of 630.00 from holding McKesson or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McKesson vs. Pembina Pipeline
Performance |
| Timeline |
| McKesson |
| Pembina Pipeline |
McKesson and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McKesson and Pembina Pipeline
The main advantage of trading using opposite McKesson and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McKesson position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| McKesson vs. Cardinal Health | McKesson vs. Henry Schein | McKesson vs. Patterson Companies | McKesson vs. Owens Minor |
| Pembina Pipeline vs. PVH Corp | Pembina Pipeline vs. Dave Busters Entertainment | Pembina Pipeline vs. Weibo Corp | Pembina Pipeline vs. Triumph Apparel |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |