Correlation Between Walgreens Boots and GBank Financial

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

Diversification Opportunities for Walgreens Boots and GBank Financial

0.31

Correlation Coefficient

Walgreens Boots  GBank Financial

Weak diversification

The 3 months correlation between Walgreens and GBank is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and GBank Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBank Financial 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 GBank Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBank Financial Holdings has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and GBank Financial go up and down completely randomly.

Pair Corralation between Walgreens Boots and GBank Financial

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to generate 3.82 times more return on investment than GBank Financial. However, Walgreens Boots is 3.82 times more volatile than GBank Financial Holdings. It trades about 0.12 of its potential returns per unit of risk. GBank Financial Holdings is currently generating about 0.19 per unit of risk. If you would invest  873.00  in Walgreens Boots Alliance on September 27, 2024 and sell it today you would earn a total of  95.00  from holding Walgreens Boots Alliance or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Walgreens Boots Alliance  vs.  GBank Financial Holdings

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Weak

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.

GBank Financial Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GBank Financial Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, GBank Financial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and GBank Financial

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

The idea behind Walgreens Boots Alliance and GBank Financial Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.