Correlation Between Walgreens Boots and Peak Resources

Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and Peak Resources 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 Peak Resources 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 Peak Resources Limited, you can compare the effects of market volatilities on Walgreens Boots and Peak Resources 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 Peak Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and Peak Resources.

Diversification Opportunities for Walgreens Boots and Peak Resources

0.4

Correlation Coefficient

Walgreens Boots  Peak Resources

Very weak diversification

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

Pair Corralation between Walgreens Boots and Peak Resources

If you would invest  921.00  in Walgreens Boots Alliance on November 30, 2024 and sell it today you would earn a total of  103.00  from holding Walgreens Boots Alliance or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Peak Resources Limited

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 5 (%) 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.

Peak Resources

Risk-Adjusted Performance

Weak

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

Pair Trading with Walgreens Boots and Peak Resources

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

The idea behind Walgreens Boots Alliance and Peak Resources Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.