Correlation Between FibraHotel and McKesson

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

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

Diversification Opportunities for FibraHotel and McKesson

0.55

Correlation Coefficient

FibraHotel  McKesson

Very weak diversification

The 3 months correlation between FibraHotel and McKesson is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FibraHotel and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and FibraHotel 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 FibraHotel 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 FibraHotel i.e., FibraHotel and McKesson go up and down completely randomly.

Pair Corralation between FibraHotel and McKesson

Assuming the 90 days trading horizon FibraHotel is expected to generate 217.92 times more return on investment than McKesson. However, FibraHotel is 217.92 times more volatile than McKesson. It trades about 0.02 of its potential returns per unit of risk. McKesson is currently generating about 0.13 per unit of risk. If you would invest  987.00  in FibraHotel on December 27, 2024 and sell it today you would earn a total of  6.00  from holding FibraHotel or generate 0.61% return on investment over 90 days.

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

FibraHotel  vs.  McKesson

FibraHotel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FibraHotel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, FibraHotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

McKesson

Risk-Adjusted Performance

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. In spite of fairly strong forward-looking signals, McKesson is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FibraHotel and McKesson

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

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.