Correlation Between Walgreens Boots and Calvert Equity

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

Diversification Opportunities for Walgreens Boots and Calvert Equity

-0.33

Correlation Coefficient

Walgreens Boots  Calvert Equity

Very good diversification

The 3 months correlation between Walgreens and Calvert is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Calvert Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity 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 Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Calvert Equity go up and down completely randomly.

Pair Corralation between Walgreens Boots and Calvert Equity

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Calvert Equity. In addition to that, Walgreens Boots is 3.34 times more volatile than Calvert Equity Fund. It trades about -0.07 of its total potential returns per unit of risk. Calvert Equity Fund is currently generating about 0.05 per unit of volatility. If you would invest  7,841  in Calvert Equity Fund on September 28, 2024 and sell it today you would earn a total of  1,562  from holding Calvert Equity Fund or generate 19.92% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  Calvert Equity Fund

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 4 (%) 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.

Calvert Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Equity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Walgreens Boots and Calvert Equity

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

The idea behind Walgreens Boots Alliance and Calvert Equity Fund 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.