Correlation Between BlackBerry and McKesson

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

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

Diversification Opportunities for BlackBerry and McKesson

0.12

Correlation Coefficient

BlackBerry  McKesson

Average diversification

The 3 months correlation between BlackBerry and McKesson is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BlackBerry and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and BlackBerry 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 BlackBerry 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 BlackBerry i.e., BlackBerry and McKesson go up and down completely randomly.

Pair Corralation between BlackBerry and McKesson

Allowing for the 90-day total investment horizon BlackBerry is expected to generate 3.28 times more return on investment than McKesson. However, BlackBerry is 3.28 times more volatile than McKesson. It trades about 0.1 of its potential returns per unit of risk. McKesson is currently generating about 0.09 per unit of risk. If you would invest  379.00  in BlackBerry on October 24, 2024 and sell it today you would earn a total of  20.00  from holding BlackBerry or generate 5.28% return on investment over 90 days.

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

BlackBerry  vs.  McKesson

BlackBerry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackBerry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, BlackBerry sustained solid returns over the last few months and may actually be approaching a breakup point.

McKesson

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 11 (%) 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 BlackBerry and McKesson

The main advantage of trading using opposite BlackBerry and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackBerry 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 BlackBerry 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.