Correlation Between Walgreens Boots and Aboitiz Equity

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

Diversification Opportunities for Walgreens Boots and Aboitiz Equity

0.07

Correlation Coefficient

Walgreens Boots  Aboitiz Equity

Significant diversification

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

Pair Corralation between Walgreens Boots and Aboitiz Equity

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Aboitiz Equity. In addition to that, Walgreens Boots is 1.34 times more volatile than Aboitiz Equity Ventures. It trades about -0.07 of its total potential returns per unit of risk. Aboitiz Equity Ventures is currently generating about -0.04 per unit of volatility. If you would invest  5,542  in Aboitiz Equity Ventures on October 12, 2024 and sell it today you would lose (2,042) from holding Aboitiz Equity Ventures or give up 36.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Aboitiz Equity Ventures

Walgreens Boots Alliance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aboitiz Equity Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aboitiz Equity Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Walgreens Boots and Aboitiz Equity

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

The idea behind Walgreens Boots Alliance and Aboitiz Equity Ventures 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.