Correlation Between Walgreens Boots and FlexShares STOXX

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

Diversification Opportunities for Walgreens Boots and FlexShares STOXX

0.28

Correlation Coefficient

Walgreens Boots  FlexShares STOXX

Modest diversification

The 3 months correlation between Walgreens and FlexShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and FlexShares STOXX Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares STOXX Global 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 FlexShares STOXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares STOXX Global has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and FlexShares STOXX go up and down completely randomly.

Pair Corralation between Walgreens Boots and FlexShares STOXX

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 6.74 times more return on investment than FlexShares STOXX. However, Walgreens Boots is 6.74 times more volatile than FlexShares STOXX Global. It trades about 0.07 of its potential returns per unit of risk. FlexShares STOXX Global is currently generating about 0.08 per unit of risk. If you would invest  879.00  in Walgreens Boots Alliance on September 17, 2024 and sell it today you would earn a total of  139.00  from holding Walgreens Boots Alliance or generate 15.81% return on investment over 90 days.

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

Walgreens Boots Alliance  vs.  FlexShares STOXX Global

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.

FlexShares STOXX Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares STOXX Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, FlexShares STOXX 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 FlexShares STOXX

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

The idea behind Walgreens Boots Alliance and FlexShares STOXX Global 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.