Correlation Between Joann and McKesson

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

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

Diversification Opportunities for Joann and McKesson

-0.73

Correlation Coefficient

Joann  McKesson

Pay attention - limited upside

The 3 months correlation between Joann and McKesson is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Joann Inc and McKesson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McKesson and Joann 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 Joann Inc 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 has no effect on the direction of Joann i.e., Joann and McKesson go up and down completely randomly.

Pair Corralation between Joann and McKesson

Given the investment horizon of 90 days Joann Inc is expected to generate 15.94 times more return on investment than McKesson. However, Joann is 15.94 times more volatile than McKesson. It trades about 0.03 of its potential returns per unit of risk. McKesson is currently generating about 0.0 per unit of risk. If you would invest  11.00  in Joann Inc on January 26, 2024 and sell it today you would lose (1.05) from holding Joann Inc or give up 9.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Joann Inc  vs.  McKesson

Joann Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joann Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

McKesson

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in McKesson are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent fundamental indicators, McKesson may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Joann and McKesson

The main advantage of trading using opposite Joann and McKesson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joann 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 Joann Inc and McKesson 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.