Correlation Between Walgreens Boots and China Resources
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and China Resources 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 China Resources 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 China Resources Land, you can compare the effects of market volatilities on Walgreens Boots and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and China Resources.
Diversification Opportunities for Walgreens Boots and China Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Walgreens and China is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and China Resources go up and down completely randomly.
Pair Corralation between Walgreens Boots and China Resources
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.59 times less risky than China Resources. The stock trades about -0.07 of its potential returns per unit of risk. The China Resources Land is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 135.00 in China Resources Land on September 23, 2024 and sell it today you would earn a total of 135.00 from holding China Resources Land or generate 100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.03% |
Values | Daily Returns |
Walgreens Boots Alliance vs. China Resources Land
Performance |
Timeline |
Walgreens Boots Alliance |
China Resources Land |
Walgreens Boots and China Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walgreens Boots and China Resources
The main advantage of trading using opposite Walgreens Boots and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.Walgreens Boots vs. SunLink Health Systems | Walgreens Boots vs. Kiaro Holdings Corp | Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. PetMed Express |
China Resources vs. DEUTSCHE WOHNEN ADRS12 | China Resources vs. CTP NV EO | China Resources vs. SEAZEN GROUP LTD | China Resources vs. Atrium Ljungberg AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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