Correlation Between Walgreens Boots and Tangerine Equity

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

Diversification Opportunities for Walgreens Boots and Tangerine Equity

0.35

Correlation Coefficient

Walgreens Boots  Tangerine Equity

Weak diversification

The 3 months correlation between Walgreens and Tangerine is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Tangerine Equity Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Equity Growth 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 Tangerine Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Equity Growth has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Tangerine Equity go up and down completely randomly.

Pair Corralation between Walgreens Boots and Tangerine Equity

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 6.81 times more return on investment than Tangerine Equity. However, Walgreens Boots is 6.81 times more volatile than Tangerine Equity Growth. It trades about 0.06 of its potential returns per unit of risk. Tangerine Equity Growth is currently generating about 0.02 per unit of risk. If you would invest  898.00  in Walgreens Boots Alliance on October 3, 2024 and sell it today you would earn a total of  35.00  from holding Walgreens Boots Alliance or generate 3.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Tangerine Equity Growth

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) 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.

Tangerine Equity Growth

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Equity Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite quite weak forward-looking signals, Tangerine Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walgreens Boots and Tangerine Equity

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

The idea behind Walgreens Boots Alliance and Tangerine Equity Growth 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.