Correlation Between Mckesson Corp and Sirius XM

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

Diversification Opportunities for Mckesson Corp and Sirius XM

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Mckesson and Sirius is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mckesson Corp and Sirius XM Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holdings and Mckesson Corp 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 Corp are associated (or correlated) with Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holdings has no effect on the direction of Mckesson Corp i.e., Mckesson Corp and Sirius XM go up and down completely randomly.

Pair Corralation between Mckesson Corp and Sirius XM

Considering the 90-day investment horizon Mckesson Corp is expected to generate 0.93 times more return on investment than Sirius XM. However, Mckesson Corp is 1.08 times less risky than Sirius XM. It trades about -0.21 of its potential returns per unit of risk. Sirius XM Holdings is currently generating about -0.21 per unit of risk. If you would invest  36,383  in Mckesson Corp on July 3, 2022 and sell it today you would lose (2,396)  from holding Mckesson Corp or give up 6.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Mckesson Corp  vs.  Sirius XM Holdings

 Performance (%) 
       Timeline  
Mckesson Corp 
Mckesson Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mckesson Corp are ranked lower than 5 (%) 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

Sirius XM Holdings 
Sirius Performance
0 of 100
Over the last 90 days Sirius XM Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sirius Price Channel

Mckesson Corp and Sirius XM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mckesson Corp and Sirius XM

The main advantage of trading using opposite Mckesson Corp and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mckesson Corp position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
Mckesson Corp vs. Amazon Inc
The idea behind Mckesson Corp and Sirius XM Holdings 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.
Sirius XM vs. Live Nation Entertainment
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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