Correlation Between Walgreens Boots and Aris Gold

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

Diversification Opportunities for Walgreens Boots and Aris Gold

0.17

Correlation Coefficient

Walgreens Boots  Aris Gold

Average diversification

The 3 months correlation between Walgreens and Aris is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Aris Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Gold Corp 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 Aris Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Gold Corp has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Aris Gold go up and down completely randomly.

Pair Corralation between Walgreens Boots and Aris Gold

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 1.5 times more return on investment than Aris Gold. However, Walgreens Boots is 1.5 times more volatile than Aris Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Aris Gold Corp is currently generating about -0.08 per unit of risk. If you would invest  894.00  in Walgreens Boots Alliance on September 13, 2024 and sell it today you would earn a total of  79.00  from holding Walgreens Boots Alliance or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Aris Gold Corp

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.

Aris Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aris Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Walgreens Boots and Aris Gold

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

The idea behind Walgreens Boots Alliance and Aris Gold Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.