Correlation Between McKesson and Owens Minor

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

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

Diversification Opportunities for McKesson and Owens Minor

-0.48

Correlation Coefficient

McKesson  Owens Minor

Very good diversification

The 3 months correlation between McKesson and Owens is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Owens Minor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Minor 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 Owens Minor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Minor has no effect on the direction of McKesson i.e., McKesson and Owens Minor go up and down completely randomly.

Pair Corralation between McKesson and Owens Minor

Considering the 90-day investment horizon McKesson is expected to generate 0.56 times more return on investment than Owens Minor. However, McKesson is 1.79 times less risky than Owens Minor. It trades about 0.07 of its potential returns per unit of risk. Owens Minor is currently generating about -0.03 per unit of risk. If you would invest  57,395  in McKesson on September 2, 2024 and sell it today you would earn a total of  5,455  from holding McKesson or generate 9.5% return on investment over 90 days.

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

McKesson  vs.  Owens Minor

McKesson

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, McKesson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Owens Minor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Owens Minor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with McKesson and Owens Minor

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

The idea behind McKesson and Owens Minor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.