Correlation Between Walgreens Boots and Crayon Group

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

Diversification Opportunities for Walgreens Boots and Crayon Group

0.3

Correlation Coefficient

Walgreens Boots  Crayon Group

Weak diversification

The 3 months correlation between Walgreens and Crayon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding 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 Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Crayon Group go up and down completely randomly.

Pair Corralation between Walgreens Boots and Crayon Group

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 2.5 times more return on investment than Crayon Group. However, Walgreens Boots is 2.5 times more volatile than Crayon Group Holding. It trades about 0.11 of its potential returns per unit of risk. Crayon Group Holding is currently generating about -0.01 per unit of risk. If you would invest  873.00  in Walgreens Boots Alliance on October 14, 2024 and sell it today you would earn a total of  303.00  from holding Walgreens Boots Alliance or generate 34.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Crayon Group Holding

Walgreens Boots Alliance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crayon Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crayon Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walgreens Boots and Crayon Group

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

The idea behind Walgreens Boots Alliance and Crayon Group Holding 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.