Correlation Between Dow Jones and MCKESSON
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By analyzing existing cross correlation between Dow Jones Industrial and MCKESSON P NEW, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of MCKESSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and MCKESSON.
Diversification Opportunities for Dow Jones and MCKESSON
Good diversification
The 3 months correlation between Dow and MCKESSON is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and MCKESSON go up and down completely randomly.
Pair Corralation between Dow Jones and MCKESSON
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the MCKESSON. In addition to that, Dow Jones is 5.02 times more volatile than MCKESSON P NEW. It trades about -0.28 of its total potential returns per unit of risk. MCKESSON P NEW is currently generating about -0.32 per unit of volatility. If you would invest 9,836 in MCKESSON P NEW on September 24, 2024 and sell it today you would lose (78.00) from holding MCKESSON P NEW or give up 0.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 85.71% |
Values | Daily Returns |
Dow Jones Industrial vs. MCKESSON P NEW
Performance |
Timeline |
Dow Jones and MCKESSON Volatility Contrast
Predicted Return Density |
Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
MCKESSON P NEW
Pair trading matchups for MCKESSON
Pair Trading with Dow Jones and MCKESSON
The main advantage of trading using opposite Dow Jones and MCKESSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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