Correlation Between FIBRA Storage and McKesson

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

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

Diversification Opportunities for FIBRA Storage and McKesson

0.85

Correlation Coefficient

FIBRA Storage  McKesson

Very poor diversification

The 3 months correlation between FIBRA and McKesson is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and FIBRA Storage 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 FIBRA Storage 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 FIBRA Storage i.e., FIBRA Storage and McKesson go up and down completely randomly.

Pair Corralation between FIBRA Storage and McKesson

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 4.5 times less return on investment than McKesson. But when comparing it to its historical volatility, FIBRA Storage is 1.5 times less risky than McKesson. It trades about 0.03 of its potential returns per unit of risk. McKesson is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  688,939  in McKesson on October 23, 2024 and sell it today you would earn a total of  510,629  from holding McKesson or generate 74.12% return on investment over 90 days.

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

FIBRA Storage  vs.  McKesson

FIBRA Storage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

McKesson

Risk-Adjusted Performance

10 of 100

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 weak forward-looking signals, McKesson showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIBRA Storage and McKesson

The main advantage of trading using opposite FIBRA Storage and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBRA Storage 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 FIBRA Storage 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..