Correlation Between Walgreens Boots and GOME Retail
Can any of the company-specific risk be diversified away by investing in both Walgreens Boots and GOME Retail 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 GOME Retail 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 GOME Retail Holdings, you can compare the effects of market volatilities on Walgreens Boots and GOME Retail 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 GOME Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and GOME Retail.
Diversification Opportunities for Walgreens Boots and GOME Retail
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walgreens and GOME is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and GOME Retail Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOME Retail Holdings 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 GOME Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOME Retail Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and GOME Retail go up and down completely randomly.
Pair Corralation between Walgreens Boots and GOME Retail
Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the GOME Retail. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 4.6 times less risky than GOME Retail. The stock trades about -0.07 of its potential returns per unit of risk. The GOME Retail Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.00 in GOME Retail Holdings on September 23, 2024 and sell it today you would lose (0.90) from holding GOME Retail Holdings or give up 90.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.03% |
Values | Daily Returns |
Walgreens Boots Alliance vs. GOME Retail Holdings
Performance |
Timeline |
Walgreens Boots Alliance |
GOME Retail Holdings |
Walgreens Boots and GOME Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walgreens Boots and GOME Retail
The main advantage of trading using opposite Walgreens Boots and GOME Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walgreens Boots position performs unexpectedly, GOME Retail 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 GOME Retail will offset losses from the drop in GOME Retail's long position.Walgreens Boots vs. Leafly Holdings | Walgreens Boots vs. WM Technology | Walgreens Boots vs. Revelation Biosciences | Walgreens Boots vs. AEye Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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