Correlation Between Acco Brands and MCKESSON

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

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

Diversification Opportunities for Acco Brands and MCKESSON

-0.4

Correlation Coefficient

Acco Brands  MCKESSON

Very good diversification

The 3 months correlation between Acco and MCKESSON is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and MCKESSON P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCKESSON P NEW and Acco Brands 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 Acco Brands 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 P NEW has no effect on the direction of Acco Brands i.e., Acco Brands and MCKESSON go up and down completely randomly.

Pair Corralation between Acco Brands and MCKESSON

Given the investment horizon of 90 days Acco Brands is expected to generate 11.45 times more return on investment than MCKESSON. However, Acco Brands is 11.45 times more volatile than MCKESSON P NEW. It trades about 0.02 of its potential returns per unit of risk. MCKESSON P NEW is currently generating about -0.21 per unit of risk. If you would invest  539.00  in Acco Brands on September 19, 2024 and sell it today you would earn a total of  7.00  from holding Acco Brands or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.06%
Values	Daily Returns

Acco Brands  vs.  MCKESSON P NEW

Acco Brands

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acco Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Acco Brands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

MCKESSON P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCKESSON P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MCKESSON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acco Brands and MCKESSON

The main advantage of trading using opposite Acco Brands and MCKESSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands 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 Acco Brands and MCKESSON P NEW 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.