Correlation Between Walgreens Boots and Jalles Machado

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

Diversification Opportunities for Walgreens Boots and Jalles Machado

-0.25

Correlation Coefficient

Walgreens Boots  Jalles Machado

Very good diversification

The 3 months correlation between Walgreens and Jalles is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and Jalles Machado SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jalles Machado SA 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 Jalles Machado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jalles Machado SA has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and Jalles Machado go up and down completely randomly.

Pair Corralation between Walgreens Boots and Jalles Machado

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the Jalles Machado. In addition to that, Walgreens Boots is 1.36 times more volatile than Jalles Machado SA. It trades about -0.08 of its total potential returns per unit of risk. Jalles Machado SA is currently generating about -0.03 per unit of volatility. If you would invest  672.00  in Jalles Machado SA on September 27, 2024 and sell it today you would lose (208.00) from holding Jalles Machado SA or give up 30.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Walgreens Boots Alliance  vs.  Jalles Machado SA

Walgreens Boots Alliance

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Walgreens Boots may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Jalles Machado SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jalles Machado SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Walgreens Boots and Jalles Machado

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

The idea behind Walgreens Boots Alliance and Jalles Machado SA 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.