Correlation Between Ferrari NV and McKesson Europe

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

By analyzing existing cross correlation between Ferrari NV and McKesson Europe AG, you can compare the effects of market volatilities on Ferrari NV and McKesson Europe 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 Ferrari NV with a short position of McKesson Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrari NV and McKesson Europe.

Diversification Opportunities for Ferrari NV and McKesson Europe

0.0

Correlation Coefficient

Ferrari NV  McKesson Europe

Pay attention - limited upside

The 3 months correlation between Ferrari and McKesson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ferrari NV and McKesson Europe AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson Europe AG and Ferrari NV 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 Ferrari NV are associated (or correlated) with McKesson Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McKesson Europe AG has no effect on the direction of Ferrari NV i.e., Ferrari NV and McKesson Europe go up and down completely randomly.

Pair Corralation between Ferrari NV and McKesson Europe

If you would invest (100.00) in McKesson Europe AG on February 26, 2024 and sell it today you would earn a total of  100.00  from holding McKesson Europe AG or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ferrari NV  vs.  McKesson Europe AG

Ferrari NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ferrari NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ferrari NV is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

McKesson Europe AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McKesson Europe AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, McKesson Europe is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ferrari NV and McKesson Europe

The main advantage of trading using opposite Ferrari NV and McKesson Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrari NV position performs unexpectedly, McKesson Europe 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 Europe will offset losses from the drop in McKesson Europe's long position.

The idea behind Ferrari NV and McKesson Europe AG 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.