Correlation Between Walgreens Boots and Blackrock Advantage

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

Diversification Opportunities for Walgreens Boots and Blackrock Advantage

0.11

Correlation Coefficient

Walgreens Boots  Blackrock Advantage

Average diversification

The 3 months correlation between Walgreens and Blackrock is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Blackrock Advantage Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Small 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 Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Small has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Walgreens Boots and Blackrock Advantage

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Blackrock Advantage. In addition to that, Walgreens Boots is 2.17 times more volatile than Blackrock Advantage Small. It trades about -0.07 of its total potential returns per unit of risk. Blackrock Advantage Small is currently generating about 0.06 per unit of volatility. If you would invest  1,411  in Blackrock Advantage Small on September 12, 2024 and sell it today you would earn a total of  561.00  from holding Blackrock Advantage Small or generate 39.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Blackrock Advantage Small

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.

Blackrock Advantage Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Blackrock Advantage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walgreens Boots and Blackrock Advantage

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

The idea behind Walgreens Boots Alliance and Blackrock Advantage Small 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.