Correlation Between Allstar Health and Walgreens Boots

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

By analyzing existing cross correlation between Allstar Health Brands and Walgreens Boots Alliance, you can compare the effects of market volatilities on Allstar Health and Walgreens Boots 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 Allstar Health with a short position of Walgreens Boots. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstar Health and Walgreens Boots.

Diversification Opportunities for Allstar Health and Walgreens Boots

-0.32

Correlation Coefficient

Allstar Health  Walgreens Boots

Very good diversification

The 3 months correlation between Allstar and Walgreens is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Allstar Health Brands and Walgreens Boots Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance and Allstar Health 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 Allstar Health Brands are associated (or correlated) with Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance has no effect on the direction of Allstar Health i.e., Allstar Health and Walgreens Boots go up and down completely randomly.

Pair Corralation between Allstar Health and Walgreens Boots

Given the investment horizon of 90 days Allstar Health Brands is expected to under-perform the Walgreens Boots. In addition to that, Allstar Health is 2.2 times more volatile than Walgreens Boots Alliance. It trades about 0.0 of its total potential returns per unit of risk. Walgreens Boots Alliance is currently generating about 0.08 per unit of volatility. If you would invest  926.00  in Walgreens Boots Alliance on December 29, 2024 and sell it today you would earn a total of  193.00  from holding Walgreens Boots Alliance or generate 20.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Allstar Health Brands  vs.  Walgreens Boots Alliance

Allstar Health Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allstar Health Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allstar Health is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Walgreens Boots Alliance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allstar Health and Walgreens Boots

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

The idea behind Allstar Health Brands and Walgreens Boots Alliance 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.