Correlation Between Walgreens Boots and GREENX METALS

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

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

Diversification Opportunities for Walgreens Boots and GREENX METALS

0.07

Correlation Coefficient

Walgreens Boots  GREENX METALS

Significant diversification

The 3 months correlation between Walgreens and GREENX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and GREENX METALS go up and down completely randomly.

Pair Corralation between Walgreens Boots and GREENX METALS

Assuming the 90 days horizon Walgreens Boots Alliance is expected to under-perform the GREENX METALS. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.74 times less risky than GREENX METALS. The stock trades about -0.07 of its potential returns per unit of risk. The GREENX METALS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  50.00  in GREENX METALS LTD on October 10, 2024 and sell it today you would lose (8.00) from holding GREENX METALS LTD or give up 16.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Walgreens Boots Alliance  vs.  GREENX METALS LTD

Walgreens Boots Alliance

Risk-Adjusted Performance

6 of 100

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 nearly fragile basic indicators, Walgreens Boots reported solid returns over the last few months and may actually be approaching a breakup point.

GREENX METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENX METALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, GREENX METALS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walgreens Boots and GREENX METALS

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

The idea behind Walgreens Boots Alliance and GREENX METALS LTD 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.