Correlation Between Walgreens Boots and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and BankFirst Capital 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 BankFirst Capital 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 BankFirst Capital, you can compare the effects of market volatilities on Walgreens Boots and BankFirst Capital 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 BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and BankFirst Capital.
Diversification Opportunities for Walgreens Boots and BankFirst Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walgreens and BankFirst is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital 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 BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and BankFirst Capital go up and down completely randomly.
Pair Corralation between Walgreens Boots and BankFirst Capital
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 9.68 times more return on investment than BankFirst Capital. However, Walgreens Boots is 9.68 times more volatile than BankFirst Capital. It trades about 0.08 of its potential returns per unit of risk. BankFirst Capital is currently generating about 0.06 per unit of risk. If you would invest 926.00 in Walgreens Boots Alliance on December 29, 2024 and sell it today you would earn a total of 190.00 from holding Walgreens Boots Alliance or generate 20.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Walgreens Boots Alliance vs. BankFirst Capital
Performance |
Timeline |
Walgreens Boots Alliance |
BankFirst Capital |
Walgreens Boots and BankFirst Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walgreens Boots and BankFirst Capital
The main advantage of trading using opposite Walgreens Boots and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital's long position.Walgreens Boots vs. PetMed Express | Walgreens Boots vs. 111 Inc | Walgreens Boots vs. High Tide | Walgreens Boots vs. SunLink Health Systems |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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