Correlation Between Henry Schein and McKesson
Can any of the company-specific risk be diversified away by investing in both Henry Schein 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 Henry Schein and McKesson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henry Schein and McKesson, you can compare the effects of market volatilities on Henry Schein 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 Henry Schein with a short position of McKesson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henry Schein and McKesson.
Diversification Opportunities for Henry Schein and McKesson
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Henry and McKesson is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Henry Schein and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and Henry Schein 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 Henry Schein 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 Henry Schein i.e., Henry Schein and McKesson go up and down completely randomly.
Pair Corralation between Henry Schein and McKesson
Given the investment horizon of 90 days Henry Schein is expected to under-perform the McKesson. In addition to that, Henry Schein is 1.1 times more volatile than McKesson. It trades about -0.01 of its total potential returns per unit of risk. McKesson is currently generating about 0.09 per unit of volatility. If you would invest 30,336 in McKesson on January 20, 2024 and sell it today you would earn a total of 22,147 from holding McKesson or generate 73.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Henry Schein vs. McKesson
Performance |
| Timeline |
| Henry Schein |
| McKesson |
Henry Schein and McKesson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henry Schein and McKesson
The main advantage of trading using opposite Henry Schein and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henry Schein 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.| Henry Schein vs. Certara | Henry Schein vs. HealthStream | Henry Schein vs. Evolent Health | Henry Schein vs. Streamline Health Solutions |
| McKesson vs. Certara | McKesson vs. HealthStream | McKesson vs. Evolent Health | McKesson vs. Streamline Health Solutions |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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