Correlation Between McKesson and Edgio

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Can any of the company-specific risk be diversified away by investing in both McKesson and Edgio 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 Edgio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McKesson and Edgio Inc, you can compare the effects of market volatilities on McKesson and Edgio 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 Edgio. Check out your portfolio center. Please also check ongoing floating volatility patterns of McKesson and Edgio.

Diversification Opportunities for McKesson and Edgio

McKessonEdgioDiversified AwayMcKessonEdgioDiversified Away100%
-0.86
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between McKesson and Edgio is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of McKesson i.e., McKesson and Edgio go up and down completely randomly.

Pair Corralation between McKesson and Edgio

Considering the 90-day investment horizon McKesson is expected to generate 392.56 times less return on investment than Edgio. But when comparing it to its historical volatility, McKesson is 169.95 times less risky than Edgio. It trades about 0.14 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Edgio Inc on October 27, 2024 and sell it today you would lose (1.00) from holding Edgio Inc or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy30.0%
ValuesDaily Returns

McKesson  vs.  Edgio Inc

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100-80-60-40-20020
JavaScript chart by amCharts 3.21.15MCK EGIO
       Timeline  
McKesson 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan500520540560580600620640
Edgio Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Edgio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

McKesson and Edgio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.68-4.26-2.83-1.40.01.53.034.566.087.61 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.15MCK EGIO
       Returns  

Pair Trading with McKesson and Edgio

The main advantage of trading using opposite McKesson and Edgio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McKesson position performs unexpectedly, Edgio 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 Edgio will offset losses from the drop in Edgio's long position.
The idea behind McKesson and Edgio Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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