Correlation Between McKesson and FIBRA Prologis

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

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

Diversification Opportunities for McKesson and FIBRA Prologis

0.35

Correlation Coefficient

McKesson  FIBRA Prologis

Weak diversification

The 3 months correlation between McKesson and FIBRA is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and FIBRA Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIBRA Prologis 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 FIBRA Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIBRA Prologis has no effect on the direction of McKesson i.e., McKesson and FIBRA Prologis go up and down completely randomly.

Pair Corralation between McKesson and FIBRA Prologis

Assuming the 90 days trading horizon McKesson is expected to generate 103.0 times less return on investment than FIBRA Prologis. But when comparing it to its historical volatility, McKesson is 138.46 times less risky than FIBRA Prologis. It trades about 0.13 of its potential returns per unit of risk. FIBRA Prologis is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,830  in FIBRA Prologis on December 24, 2024 and sell it today you would earn a total of  688.00  from holding FIBRA Prologis or generate 11.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

McKesson  vs.  FIBRA Prologis

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 recent stock price disturbance, may contribute to short-term losses for the investors.

FIBRA Prologis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Prologis are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, FIBRA Prologis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McKesson and FIBRA Prologis

The main advantage of trading using opposite McKesson and FIBRA Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McKesson position performs unexpectedly, FIBRA Prologis 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 FIBRA Prologis will offset losses from the drop in FIBRA Prologis' long position.

The idea behind McKesson and FIBRA Prologis 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.