Correlation Between Apple and Mckesson Corp

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

Diversification Opportunities for Apple and Mckesson Corp

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apple and Mckesson is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Mckesson Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mckesson Corp and Apple 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 Apple Inc are associated (or correlated) with Mckesson Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mckesson Corp has no effect on the direction of Apple i.e., Apple and Mckesson Corp go up and down completely randomly.

Pair Corralation between Apple and Mckesson Corp

Given the investment horizon of 90 days Apple Inc is expected to under-perform the Mckesson Corp. In addition to that, Apple is 1.54 times more volatile than Mckesson Corp. It trades about -0.15 of its total potential returns per unit of risk. Mckesson Corp is currently generating about -0.2 per unit of volatility. If you would invest  36,302  in Mckesson Corp on June 29, 2022 and sell it today you would lose (2,014)  from holding Mckesson Corp or give up 5.55% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Mckesson Corp

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Apple Price Channel

Mckesson Corp 
Mckesson Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mckesson Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Mckesson Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Mckesson Price Channel

Apple and Mckesson Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Mckesson Corp

The main advantage of trading using opposite Apple and Mckesson Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Mckesson Corp 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 Corp will offset losses from the drop in Mckesson Corp's long position.
Apple vs. Kibush Capital Corp
The idea behind Apple Inc and Mckesson Corp 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.
Mckesson Corp vs. Sunrun Inc
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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