Correlation Between Equifax and Mckesson Corp

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

Diversification Opportunities for Equifax and Mckesson Corp

  Correlation Coefficient

Modest diversification

The 3 months correlation between Equifax and Mckesson is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Mckesson Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mckesson Corp and Equifax 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 Equifax 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 Equifax i.e., Equifax and Mckesson Corp go up and down completely randomly.

Pair Corralation between Equifax and Mckesson Corp

Considering the 90-day investment horizon Equifax is expected to generate 4.19 times less return on investment than Mckesson Corp. In addition to that, Equifax is 1.36 times more volatile than Mckesson Corp. It trades about 0.02 of its total potential returns per unit of risk. Mckesson Corp is currently generating about 0.12 per unit of volatility. If you would invest  15,463  in Mckesson Corp on July 8, 2022 and sell it today you would earn a total of  19,974  from holding Mckesson Corp or generate 129.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Equifax  vs.  Mckesson Corp

 Performance (%) 
Equifax Performance
0 of 100
Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Equifax is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Equifax Price Channel

Mckesson Corp 
Mckesson Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mckesson Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, Mckesson Corp may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Mckesson Price Channel

Equifax and Mckesson Corp Volatility Contrast

   Predicted Return Density   

Pair Trading with Equifax and Mckesson Corp

The main advantage of trading using opposite Equifax and Mckesson Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax 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.
Equifax vs. Amazon Inc
The idea behind Equifax 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. Amazon 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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