Correlation Between Walgreens Boots and ASML HOLDING

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

Diversification Opportunities for Walgreens Boots and ASML HOLDING

-0.34

Correlation Coefficient

Walgreens Boots  ASML HOLDING

Very good diversification

The 3 months correlation between Walgreens and ASML is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY 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 ASML HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML HOLDING NY has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and ASML HOLDING go up and down completely randomly.

Pair Corralation between Walgreens Boots and ASML HOLDING

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.82 times more return on investment than ASML HOLDING. However, Walgreens Boots is 2.82 times more volatile than ASML HOLDING NY. It trades about 0.15 of its potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.18 per unit of risk. If you would invest  911.00  in Walgreens Boots Alliance on September 12, 2024 and sell it today you would earn a total of  131.00  from holding Walgreens Boots Alliance or generate 14.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Walgreens Boots Alliance  vs.  ASML HOLDING NY

Walgreens Boots Alliance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 7 (%) 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.

ASML HOLDING NY

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walgreens Boots and ASML HOLDING

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

The idea behind Walgreens Boots Alliance and ASML HOLDING NY 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.