Correlation Between McKesson and Henry Schein

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

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

Diversification Opportunities for McKesson and Henry Schein

0.4

Correlation Coefficient

McKesson  Henry Schein

Very weak diversification

The 3 months correlation between McKesson and Henry is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding McKesson and Henry Schein in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henry Schein and McKesson 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 are associated (or correlated) with Henry Schein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henry Schein has no effect on the direction of McKesson i.e., McKesson and Henry Schein go up and down completely randomly.

Pair Corralation between McKesson and Henry Schein

Considering the 90-day investment horizon McKesson is expected to under-perform the Henry Schein. But the stock apears to be less risky and, when comparing its historical volatility, McKesson is 1.16 times less risky than Henry Schein. The stock trades about -0.01 of its potential returns per unit of risk. The Henry Schein is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,624  in Henry Schein on May 6, 2025 and sell it today you would earn a total of  174.00  from holding Henry Schein or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

McKesson  vs.  Henry Schein

McKesson

Risk-Adjusted Performance

Very Weak

Over the last 90 days McKesson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, McKesson is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Henry Schein

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Henry Schein are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Henry Schein is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with McKesson and Henry Schein

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

The idea behind McKesson and Henry Schein 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.