Correlation Between Walgreens Boots and IGEN Networks

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

Diversification Opportunities for Walgreens Boots and IGEN Networks

0.04

Correlation Coefficient

Walgreens Boots  IGEN Networks

Significant diversification

The 3 months correlation between Walgreens and IGEN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and IGEN Networks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGEN Networks Corp 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 IGEN Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGEN Networks Corp has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and IGEN Networks go up and down completely randomly.

Pair Corralation between Walgreens Boots and IGEN Networks

Considering the 90-day investment horizon Walgreens Boots is expected to generate 51.04 times less return on investment than IGEN Networks. But when comparing it to its historical volatility, Walgreens Boots Alliance is 30.82 times less risky than IGEN Networks. It trades about 0.06 of its potential returns per unit of risk. IGEN Networks Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in IGEN Networks Corp on September 14, 2024 and sell it today you would lose (0.01) from holding IGEN Networks Corp or give up 100.0% of portfolio value over 90 days.

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

Walgreens Boots Alliance  vs.  IGEN Networks Corp

Walgreens Boots Alliance

Risk-Adjusted Performance

4 of 100

Insignificant

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 uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

IGEN Networks Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGEN Networks Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, IGEN Networks displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walgreens Boots and IGEN Networks

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

The idea behind Walgreens Boots Alliance and IGEN Networks Corp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.