Correlation Between Powell Max and Walgreens Boots

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

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

Diversification Opportunities for Powell Max and Walgreens Boots

-0.49

Correlation Coefficient

Powell Max  Walgreens Boots

Very good diversification

The 3 months correlation between Powell and Walgreens is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Powell Max Limited 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 Powell Max 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 Powell Max Limited 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 Powell Max i.e., Powell Max and Walgreens Boots go up and down completely randomly.

Pair Corralation between Powell Max and Walgreens Boots

Given the investment horizon of 90 days Powell Max Limited is expected to under-perform the Walgreens Boots. In addition to that, Powell Max is 1.5 times more volatile than Walgreens Boots Alliance. It trades about -0.09 of its total potential returns per unit of risk. Walgreens Boots Alliance is currently generating about 0.16 per unit of volatility. If you would invest  824.00  in Walgreens Boots Alliance on September 21, 2024 and sell it today you would earn a total of  131.00  from holding Walgreens Boots Alliance or generate 15.9% return on investment over 90 days.

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

Powell Max Limited  vs.  Walgreens Boots Alliance

Powell Max Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powell Max Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Walgreens Boots Alliance

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Powell Max and Walgreens Boots

The main advantage of trading using opposite Powell Max and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powell Max 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 Powell Max Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.