Correlation Between McKesson and Southwestern Energy
Can any of the company-specific risk be diversified away by investing in both McKesson and Southwestern Energy 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 Southwestern Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McKesson and Southwestern Energy, you can compare the effects of market volatilities on McKesson and Southwestern Energy 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 Southwestern Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of McKesson and Southwestern Energy.
Diversification Opportunities for McKesson and Southwestern Energy
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between McKesson and Southwestern is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Southwestern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern Energy 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 Southwestern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy has no effect on the direction of McKesson i.e., McKesson and Southwestern Energy go up and down completely randomly.
Pair Corralation between McKesson and Southwestern Energy
If you would invest 56,621 in McKesson on November 2, 2024 and sell it today you would earn a total of 3,839 from holding McKesson or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.26% |
| Values | Daily Returns |
McKesson vs. Southwestern Energy
Performance |
| Timeline |
| McKesson |
| Southwestern Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
McKesson and Southwestern Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McKesson and Southwestern Energy
The main advantage of trading using opposite McKesson and Southwestern Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McKesson position performs unexpectedly, Southwestern Energy 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 Southwestern Energy will offset losses from the drop in Southwestern Energy's long position.| McKesson vs. Cardinal Health | McKesson vs. Henry Schein | McKesson vs. Patterson Companies | McKesson vs. Owens Minor |
| Southwestern Energy vs. Antero Resources Corp | Southwestern Energy vs. EQT Corporation | Southwestern Energy vs. Matador Resources | Southwestern Energy vs. Range Resources Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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