Correlation Between Walgreens Boots and Investment

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

Diversification Opportunities for Walgreens Boots and Investment

0.5

Correlation Coefficient

Walgreens Boots  Investment

Very weak diversification

The 3 months correlation between Walgreens and Investment is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Investment and Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment and Industrial 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment and Industrial has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Investment go up and down completely randomly.

Pair Corralation between Walgreens Boots and Investment

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Investment. In addition to that, Walgreens Boots is 2.25 times more volatile than Investment and Industrial. It trades about -0.04 of its total potential returns per unit of risk. Investment and Industrial is currently generating about 0.03 per unit of volatility. If you would invest  6,796,552  in Investment and Industrial on December 2, 2024 and sell it today you would earn a total of  773,448  from holding Investment and Industrial or generate 11.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Investment and Industrial

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 somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Investment and Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investment and Industrial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and Investment

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

The idea behind Walgreens Boots Alliance and Investment and Industrial 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.