Correlation Between Walgreens Boots and Barings High

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

Diversification Opportunities for Walgreens Boots and Barings High

0.19

Correlation Coefficient

Walgreens Boots  Barings High

Average diversification

The 3 months correlation between Walgreens and Barings is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Barings High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings High Yield 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 Barings High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings High Yield has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Barings High go up and down completely randomly.

Pair Corralation between Walgreens Boots and Barings High

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 44.4 times more return on investment than Barings High. However, Walgreens Boots is 44.4 times more volatile than Barings High Yield. It trades about 0.16 of its potential returns per unit of risk. Barings High Yield is currently generating about 0.05 per unit of risk. If you would invest  866.00  in Walgreens Boots Alliance on September 18, 2024 and sell it today you would earn a total of  131.00  from holding Walgreens Boots Alliance or generate 15.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Barings High Yield

Walgreens Boots Alliance

Risk-Adjusted Performance

5 of 100

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

Barings High Yield

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Barings High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walgreens Boots and Barings High

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

The idea behind Walgreens Boots Alliance and Barings High Yield 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.