Correlation Between Aethlon Medical and McKesson

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

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

Diversification Opportunities for Aethlon Medical and McKesson

0.09

Correlation Coefficient

Aethlon Medical  McKesson

Significant diversification

The 3 months correlation between Aethlon and McKesson is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aethlon Medical and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and Aethlon Medical 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 Aethlon Medical 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 Aethlon Medical i.e., Aethlon Medical and McKesson go up and down completely randomly.

Pair Corralation between Aethlon Medical and McKesson

Given the investment horizon of 90 days Aethlon Medical is expected to under-perform the McKesson. In addition to that, Aethlon Medical is 5.42 times more volatile than McKesson. It trades about -0.01 of its total potential returns per unit of risk. McKesson is currently generating about 0.07 per unit of volatility. If you would invest  37,447  in McKesson on October 9, 2024 and sell it today you would earn a total of  20,596  from holding McKesson or generate 55.0% return on investment over 90 days.

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

Aethlon Medical  vs.  McKesson

Aethlon Medical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aethlon Medical are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Aethlon Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

McKesson

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, McKesson disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aethlon Medical and McKesson

The main advantage of trading using opposite Aethlon Medical and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aethlon Medical 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.

The idea behind Aethlon Medical and McKesson 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.